Logistics giant DHL has identified five supply chain opportunities opening up in the life sciences sector in 2020 and beyond, a future where the Internet, dwindling health-care benefits, and new health markets feature prominently.
The report said key opportunities in the supply chain industry over the next few years will be in the following areas: distributing directly to end-consumers, increasing differentiation of supply chains, deepening access by emerging markets to big cities, rising importance of supply chain visibility, and keeping supply chain flexible to adapt to requirements of innovative products.
“With this white paper, we have laid out the key trends of tomorrow’s life sciences logistics. Logistics decision makers [should] think about future business requirements and differentiation opportunities through logistics,” said Angelos Orfanos, president for life sciences and healthcare, DHL Customer Solutions & Innovation.
Through the internet, people have become better informed on health-related issues and treatment options. Moreover, new products for private health monitoring are available, while the limits for reimbursement of health-care services narrow in many mature markets.
“These developments support the shift towards self-medication, which boosts the global market of over-the-counter products by 8.3 percent annually until 2016 and drives the establishment of direct distribution channels to end-consumers,” DHL said.
Manufacturers should thus consider building up their e-commerce operation, either by developing their own or distributing their products via a third-party platform.
The study also points to an increasing differentiation of supply chains. Mode of transportation, warehousing consolidation, and depth of distribution will need to be tailored in each country to the life sciences product, differentiating high-value or specialty drugs and implants, innovative standard drugs and devices, generic drugs and frugal or low-tech devices OTCs, nutraceuticals and consumer medical devices.
At the same time, new health markets, such as China, India, Brazil, Russia, or Mexico, broaden the base for direct-to-consumer medication and medical devices as well as “classical” prescription products dispensed via pharmacies and hospitals. In China, spending for medicines is expected to increase by 166 percent from US$67 billion in 2011 to $161 billion in 2016.
Pharmaceutical and medical device manufacturers should therefore expand their distribution capabilities to smaller cities and even rural areas in emerging countries.
In the future, comprehensive visibility within the supply chain will become increasingly important to ensure product security and integrity, enable lean and demand-driven supply chains, and manage the control and outsource of logistics processes.
Finally, manufacturers will need to stay flexible to quickly adapt their supply chains to new regulatory standards and the distribution requirements of innovative products, such as product bundles for home care of rare diseases or 3-D printed personalized implants.