Logistics

Logistics for life sciences still out in the cold

Amit Mitra | Updated on October 02, 2011

Life sciences logistics needs to focus on improving end-to-end supply chain integrity.   -  Business Line

While the life sciences segment is poised for higher growth, inefficiencies in logistics could be an impediment to the sector's growth.



A goods carrier crossing a State border in India may have to wait anywhere between two to 24 hours to get the necessary clearances before it can enter the next State. Compare this to transit across borders in China, which takes between 15 minutes to two hours. Or in the EU, where the carrier usually does not have to wait for more than a few minutes.

Then imagine the carrier to be a temperature-controlled vehicle carrying parcels of sensitive life sciences products, such as high-quality bulk drugs, formulations and vaccines. Not only does this increase cost for producers, but also poses a threat to the quality of the products. This is just one of the inefficiencies in the existing logistics infrastructure for the Rs 2,700-billion Indian life sciences market.

A joint study undertaken by global logistics player DHL, part of Deutsche Post DHL, and the Organisation of Pharmaceutical Producers of India (OPPI), has revealed that while it is clear that the life sciences segment is poised for higher growth, inefficiencies in logistics “could be an impediment to the sector's growth”.

The study entitled Transforming Life Sciences Logistics in India was done after interviewing over 40 senior executives from companies such as Novartis, Watson Pharma, Shanta Biotech, Johnson & Johnson, Baxter India, Lufthansa Cargo and Safmarine India.

Best practices

Mr Christoph Remund, CEO, DHL Global Forwarding India, said: “We closely examined India's life sciences logistics setup and benchmarked these against the best practices prevailing across the globe.” Companies are using logistics as a source of competitive advantage to accelerate their products' reach into the rural market. As a result of these global trends, Indian life sciences logistics needs to focus on driving cost efficiencies and improving end-to-end supply chain integrity, the study points out.

India has a strong base for manufacturing APIs and pharmaceuticals, with over 10,000 manufacturing sites and more than 125 US FDA-approved facilities. Even the manufacturing of medical devices is expected to grow at about 12 per cent this fiscal.

But in terms of logistics infrastructure, it is lagging behind other countries. The recent World Bank's Logistics Performance Index ranked India 47th with a score of 3.1 (world average 2.5) in 2010, dropping from 39{+t}{+h} in 2007. The index evaluates the logistics performance of countries on the basis of six key dimensions such as Customs clearances, infrastructure, ease of shipment and tracking.

On the brighter side, there have been, in recent times, private players investing in the life sciences logistics sector. For instance, India's first airport-based pharma zone, a dedicated cargo handling zone for pharma products, was set up by the GMR Group and UK-based Menzies Aviation at Hyderabad international airport — it is designed to handle a throughput of 30,000 tonnes annually.

Similarly the Gujarat Government plans to invest Rs 160 crore to develop a 312-acre pharma SEZ with the JB Group. Lufthansa Cargo plans to add six MD-11 MF airplanes to handle pharma cargo by 2015. Reliance Industries recently picked up majority stake in Deccan 360 to improve connectivity in the pharma cold chain segment. At the same time, the DHL-OPPI study pointed out that various inefficiencies exist, both in assets, such as transport and storage facilities, and enablers like systems and technology.

Shared warehouses

The study pegged the time taken for a hypothetical one-way trip covering about 350 km at 24-36 hours in India, as against less than 18 hours in China and 8-10 hours in the EU. While trucks in India run on an average 200 km a day, those in China and Japan log 600 km and 800 km a day respectively.

One of the emerging trends in developed countries in the area of life sciences logistics is the concept of shared multi-user warehouses and shared ocean freight reefer containers. DHL will be the first logistics company in India to launch a shared ocean freight reefer solution, according to the study.

One of the primary requirements for life sciences logistics segment is temperature-controlled logistics, which is crucial for vaccines, biosimilars and even for a large chunk of medical devices. Special packaging and temperature monitoring devices, temperature- controlled transport and storage are the key ingredients for this category of logistics.

Expansion of public-private partnership to construct connecting roads and set up warehouses, simplification of import and export processes as well as increasing efficacy of contingency plans were some of the recommendations.

Published on October 02, 2011

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