Packaging Services | Logistics & Warehousing

Overview of pharmaceutical logistic services & 3PL providers offering packaging, warehousing & distribution services for pharmaceutical products.

Q1. What is pharmaceutical Third Party-Logistics 3PL?

3PL (Third Party Logistics) can be defined as the outsourcing of all or parts of a company’s supply chain management functions such as commercial warehousing logistics, fulfillment and/or transportation services to a 3rd party company.

Logistics solutions typically include receiving the goods into production warehouses and distribution centre warehouses and handling inventory management of the goods using warehouse management technologies and solutions and other information technology systems.

According to a report published by Grand View Research, the global biopharmaceutical third-party logistics market size was estimated at USD 86.37 billion in 2018, and has continued to expand ever since.

The rising trend of outsourced logistics services can be attributed to the growth in the pharmaceutical distribution network owing to its strong sales numbers, and the rise in the number of biosimilar launches. However, the 3PL business is not unique to the pharma industry—it exists for a wide range of businesses.

The defining characteristic of global third party logistics providers offering outsourced logistics services is that they act as the product owner’s agent, arranging storage, commercial warehousing logistics (including production warehouses, distribution centre warehouses, etc.) and transportation, often including receiving and fulfilling orders, and managing payments without taking ownership of the product.

Pharmaceutical third party logistics (3PL) providers provide end-to-end third-party logistics (3PL) services including shipping and distribution for contract manufacturing organizations (CMOs), contract development and manufacturing organizations (CDMOs), online pharmacies, etc.

Beyond basic logistics, pharma third-party logistics experts can handle back office contract services like accounting, specialized warehousing solutions and logistics, and even literature and samples.

When it comes to storing and shipping medications, there is little to no room for error. As such, pharma third party logistics (3PL) providers offering end-to-end third-party logistics (3PL) services are held to a higher standard. For example, warehousers with production warehouses, distribution centre warehouses, etc. and shippers of pharmaceuticals in the United States must be registered with the FDA.

Moreover, third-party logistics experts or 3PL providers world over have to conform to stringent government regulations and safety precautions, needed to keep operations flowing in a safe and responsible manner.

As such, relying on a third party logistics (3PL) provider can help companies across the pharmaceutical supply chain enhance their risk mitigation and pharmaceutical supply chain management capabilities, as well as save on material handling and shipping costs, improve flow, reduce costs associated with reverse logistics, and provide transportation insights.

Q2. What are pharma 3PL distribution services & what is the criteria for choosing a 3PL provider for pharmaceuticals?

With systems designed for the unique needs of prescription drug and medical device distribution, pharmaceutical third party logistics (3PL) providers can offer end-to-end third-party logistics (3PL) services such as pharmaceutical warehouse management technologies and solutions (pharma warehouse and transportation solutions) amongst various other contract services, some of which are noted below.

3PL distribution services contribute towards reducing medicine prices, ensuring product quality and supply, improving transportation efficiency, and improving the overall market (specialty pharmaceutical market) innovation capability. Furthermore, end-to-end third-party logistics (3PL) services can mitigate risks and create closer connections throughout the patient journey.

Pharma 3PL distribution services

- Custom solutions that enable speed, efficiency and a high-level of quality assurance

- Innovative and value-driven transportation solutions

- Unique handling of specialty pharmaceuticals

- Pharmaceutical warehouse management technologies and solutions

- Systems for tracking pharma products through the pharmaceutical supply chain

- Temperature-sensitive pharmaceuticals transportation

- Regulatory compliance

- Analytical contract services

- Reverse distribution and returns processing of pharmaceutical drug products

- Serialization and aggregation

Third-party logistics (3PL) provider

The FDA defines a third-party logistics provider (3PL) as an entity that provides or coordinates warehousing, or other outsourced logistics services of a product in interstate commerce on behalf of a manufacturer, wholesale distributor, or dispenser of a product, but does not take ownership of the product, nor have responsibility to direct the sale or disposition of the product.

The demand for outsourcing distribution and transportation services has grown significantly over the last few years. Outsourcing transportation services for distributing pharmaceutical drugs has reduced the overheads of giant pharmaceutical companies such as contract manufacturing organizations (CMOs), contract development and manufacturing organizations (CDMOs), etc.

Pharmaceutical distribution may entail many risks, but an experienced, well-qualified 3PL can help keep operations profitable, compliant and safe. While selecting suitable pharmaceutical third-party logistics providers one should assess the following attributes of their pharmaceutical warehouse and distribution services (pharma warehouse and transportation solutions), amongst various others.

- Temperature-controlled supply chain capabilities

- Inventory management and stock restoration capabilities

- Experience

- Equipment control

- Facilities

Q3. What is the role of cold chain logistics in the pharmaceutical industry?

A cold chain is a temperature-controlled supply chain. It typically involves constant refrigeration of the product from the time of its production through its transportation, handling, storage, and delivery.

An unbroken pharmaceutical cold chain is a sequence of storage efforts that maintain a given temperature range (usually within the bracket of 2 – 8 degrees) to transport a sensitive product, including the likes of pharmaceutical drugs and biological materials.

Under the cold-chain umbrella, the refrigerated category (2 to 8°C) is by far the largest category based on value. However, among today’s newer CGT (Cell and gene therapy) offerings, other novel biologic therapies, and several vaccine candidates in clinical trials, there is increasing demand for maintaining products at deep frozen and even cryogenic temperatures. The word "cryogenic" means "producing, or related to, low temperatures," and all cryogenic liquids are extremely cold.

Pharmaceutical cold chain is thus a major part of the supply chain in the healthcare industry and cold chain logistics services help the pharmaceutical and healthcare industry maintain a continual supply of drugs from suppliers and distributors in varied (often global) locations.

Pharmaceutical drug products require specialized procedures for their packaging, receipt, storage, handling and distribution to their final destination. Not transporting or storing pharmaceuticals within their prescribed temperature range can have a serious effect on the health of individuals, in some cases it can even be life-threatening. A cold chain is required to preserve and maintain the usability of such pharma products.

- High temperature-sensitive pharmaceuticals can become less effective, and in some cases even toxic if temperature exceeds a certain limit.

- Low temperature-sensitive pharmaceuticals usually lose their therapeutic properties if frozen.

The issue of temperature excursions is thus crucial to pharmaceutical companies since many of their pharma products are temperature-sensitive pharmaceuticals and require temperature-controlled storage and distribution to maintain their efficacy and other properties.

Pharmaceutical third-party logistics providers are now getting involved in pharma cold chain (e.g. pharmaceutical cold chain packaging services), important for specialty products as well as in business processes that support clinical drug trials.

Temperature management in the pharmaceutical cold chain is currently being done through various ways. The most basic process involves packaging discrete devices called temperature data loggers along with the shipment. More sophisticated data loggers have the ability to measure temperature, shock, humidity, vibration, and other attributes.

Q4. How does 3PL help drug distribution of specialty pharmaceuticals?

Although currently there is no standard specialty drug definition, to be considered specialty pharmaceuticals, medications typically must be identified as either highly complex, high cost or high touch. Often, but not always, specialty drugs are biological drug products or simply, biologics.

Because specialty drugs incorporate the use of biologic tissue, they usually require refrigeration, specialized temperature-controlled supply chain management, handling, storage and transportation or have other requirements due to fragility concerns.

One of the attributes of the burgeoning specialty pharmaceutical market is that many of the pharmaceutical drug products are moving through distribution via nontraditional channels. Part of this is due to their very nature—they often require special handling (such as temperature-controlled supply chains, refrigerated transportation and storage).

Many manufacturers choose to outsource their specialty drug distribution operations so that they can focus on what they’re best at, their core competency of developing and commercializing specialty drugs. Global third-party logistics providers can help alleviate many of the burdens that manufacturers face when moving from clinical trials into commercialization.

They take a consultative approach early in this process to help inform the best commercialization and launch strategy to include pharma 3PL distribution services, provider education, patient reimbursement, any type of service that’s going to be needed to maximize that launch efficiently and to get to the most patients in as efficient a manner as possible.

In addition, with improved supply chain visibility, specialty drug manufacturers and other pharmaceutical companies such as contract manufacturing organizations (CMOs) and contract development and manufacturing organizations (CDMOs) for specialty pharmaceuticals can save time and money and benefit from the custom solutions facilitated by global third party logistics providers.

While cost efficiency is a primary reason that many manufacturers choose to outsource to a 3PL, it is certainly not the only benefit. Creating strategic partnerships with 3PL providers can empower specialty drug manufacturers of all sizes to:

- Be Flexible

- Expand capacity for new products

- Manage ebbs and flows in product demand

- Leverage best-in-class pharma 3PL distribution services, financial resources and technology, without significant infrastructure investments

- Gain expert support with meeting Drug Supply Chain Security Act (DCSCA) track-and-trace requirements

- Shorten timelines to launch

- Temperature-sensitive (cold-chain) supply chain management

Collectively, pharmaceutical companies, contract packagers, wholesalers, third-party logistics (3PL), service providers, and dispensers have invested billions in systems to increase the efficiency, accuracy, and confidentiality while handling serialized specialty pharmaceuticals.

Q5. Which are the leading companies offering pharmaceutical logistics services in the pharmaceutical industry?

As seen above, 3PL service providers have become an integral part of the pharmaceutical industry as they ensure proper handling and distribution of drug products across the pharmaceutical supply chain. Some of the leading pharmaceutical 3PL providers and pharmaceutical logistics services they offer are explored in detail below.

R&S Solutions

R&S Solutions provides cost-effective, high-quality logistic services to the pharmaceutical and related health care industry such as commercial warehousing chains, wholesalers, and distributors or direct to retail, hospitals, clinics, etc.

R&S Solutions operates a 230,000 square foot state-of-the-art facility offering pharmaceutical logistics solutions. Their pharmaceutical cold chain services include uninterrupted series of refrigerated storage and distribution activities for temperature-sensitive products, along with associated logistics, via a desired low-temperature range.

Furthermore, R&S Solutions offers pharma warehouse and transportation solutions and has one of the largest C-II vaults in the industry, providing unparalleled security and service throughout the marketplace. It serves as a full-service logistics provider and can handle finished dosage forms, as well as Active Pharmaceutical Ingredients (APIs).

WDSrx

WDSrx functions as a full-service logistics provider for the pharma industry. WDSrx's pharmaceutical 3PL facilities are authorized for over-the-counter, prescription and schedule CII-CV controlled substances. Their pharmaceutical warehouse facilities are protected by multiple systems to ensure inventory security.

WDSrx offers pharma cold chain logistics solutions and follows cGMP guidelines for pharma cold chain logistics established by the FDA with refrigerated storage temperature ranging from 2-8 degrees Celsius and frozen storage at around minus 15 degrees Celsius.

Cardinal Health

Cardinal Health's 3PL pharmaceutical warehouse facilities have integrated systems and processes. Their warehouses can store DEA-controlled substance pharmaceutical products and are equipped with advanced inventory management technology.

Cardinal Health offers pharmaceutical cold chain packaging services and its warehouses can store control room temperature, refrigerated, frozen and DEA-controlled substance pharmaceutical products and are equipped with advanced inventory management technology.

McKesson

McKesson Corporation functions as a full-service logistics provider and provides successful market access and commercialization of pharmaceutical products with accurate and secure third-party pharmaceutical logistics solutions. Whatever your product is, their 3PL services and pharmaceutical logistics solutions ensure accurate, safe and cost-effective distribution services.