Podcast: Capacity disruption, personalized medicines, and pharma investments in 2022

Mike Iorfino: Welcome to the World Courier Insights Podcast. I'm Mike Iorfino, Manager of External Communications at AmerisourceBergen, and your host for this exciting new podcast series where we'll explore the latest industry news, and trends across the pharmaceutical logistics sector.

In each episode, we'll speak with industry leaders and World Courier experts about the latest industry news, including emerging trends, challenges and innovative solutions that are moving pharma logistics forward, and helping to create healthier futures for patients worldwide.

Today, we'll speak with Jens Mattuschka, World Courier's Regional Vice President of the Nordics, Central and Eastern Europe.

Jens, welcome to the show, and thanks for being our first guest. Before we dive in, would you mind introducing yourself and sharing more about your role?

Jens Mattuschka: Hi, Mike. I’m the Regional Vice President for half of Europe. I'm in charge of 21 countries for the company. Basically, what we're doing is we manage the medicine transportation and storage across Europe and, of course, all around the globe.

Mike: Thanks, Jens. Given your role leading operations in those markets, you certainly have a unique vantage point for how the pandemic has affected the pharmaceutical industry and the global supply chain. We've seen the recent increase in COVID cases due to the Omicron variant. It has certainly dominated headlines in the last few months. How has this surge affected the pharmaceutical logistics sector?

Jens: Quite extensively. Omicron is really very contagious compared to what we have seen before. It has affected a lot of people. Where at the beginning of the pandemic, which you all experienced too, we have seen a couple of challenges already, but the latest developments I would say in the Nordic winter periods for the Northern Hemisphere, quite extensively. I just want to give you a couple of examples for that:

Staff shortages are where we have been the last two years, working really on skeleton teams. The last couple of months was even evolving in the entire industry, definitely. That's why the critical infrastructure was mainly impacted. I mean, just think about what happened to us on hospitality, etc, where many people have been out sick for quite some time or in quarantine.

What we have seen on the transport side is even a higher need to ship medicine and even with less available resources, but still keeping the necessary timelines.

Mike: You mentioned the transport side, and certainly one area that we've seen a pretty significant impact is related to air freight. How has the pandemic affected capacity and even costs?

Jens: Heavily, Mike. Just think about what you also see as a normal passenger. How many flights have been delayed, or even cancelled over the last few years. The global logistics is heavily impacted by this. If you look back in the year 2020, or 2021, they have been extremely demanding in this regard, and this will continue in 2022..
I will just give you stats or a number; pre the current level of air traffic, be it cargo or passenger flights, we have seen an increase of average cost by roughly 35%. This is what I've seen lately also continuing very much in this calendar year. This is basically because many planes have been grounded because of the pandemic.

That's why we expect air capacity to remain constrained for at least the next 18 to 24 months. Just think about the fuel and energy cost, which you all pay currently on your side, the same applies to jet fuel, no question about this one. The energy prices are not going down in the next few months, either. Geopolitical situation is proving that.

There's also, of course, I would say, more demand for a specialized type of handling. Yes, there's a lot of vaccine business right now, which we see, but at the same time, and I can talk about later if you like also about other trends here. This is mainly related to the air freight capacity.

That's why as a consequence, long-haul transports, in particular, need even more time to plan and to optimize the routing, simply because of the limits we see on the sky. My own recommendation to anyone who needs a logistics supplier like us, engage as early as possible to mitigate the impact and to have enough time to ship your products to the final destination.

Mike: When we're talking about pharmaceutical logistics, we're talking about the shipment of medication and products that patients around the world rely on, and they need these treatments to arrive on time and in the right condition. You mentioned the long-haul transport as one route. What have you seen across the industry to overcome some of these infrastructure challenges and even limited air freight capacity?

Jens: I like the question actually. What I would say is we see now a tremendous collaboration among the government agencies, the pharmaceutical manufacturers and supply chain partners. Just to give you an example on the government agencies in the past, they were let's say much more strict or less flexible in approving certain type of new, disruptive ways of distribution, and that worked perfectly since the pandemic outbreak.

One example I can really give is we are transporting in Norway across the country the vaccines, and we are working there very, very closely with the Norwegian Institute of Health. They have been extremely flexible and very disruptive in finding solutions. Likewise, on our side, we can say this. I have heard this also from other partners and competitors in the industry because DTI can be good for each of us who are also in the logistics industries that we still enable a safe and secure distribution of the products. What was very much in focus was, of course, vaccines the last two years, and this continues at the moment, of course, but the same applies to other very critical medicine.

Mike: You mentioned the collaboration with the NIPH. I'm just wondering if you could give a high-level example of what the conversations with the NIPH has been like in preparing for the rollout of the COVID vaccine, knowing it is such an unprecedented effort.

Jens: What we did with these colleagues, actually over years, and even prior to the pandemic, we developed a certain concept how to distribute the vaccines across the country. The way we are doing this is, on an annual basis, we are performing a so-called mock run, reaching all the destinations. Just to make this more practical and not only a theoretical exercise, what we are going to do is, since a couple of years now, is we are distributing the normal flu vaccines. By this, we can test, or we could test in the past, any kind of supply chain gaps or challenges.

Once the pandemic outbreak started and the first vaccines were available, we could exactly follow the protocol which we have developed. That's why it was really a very successful type of distribution across the country no matter what kind of temperature or weather conditions we had.

Mike: That's excellent, and certainly speaks to the collaboration we've seen throughout the pandemic. To that point, what are some of the best practices or lessons learned beyond just that increased collaboration that we can actually take away from the last two years and implement moving forward?

Jens: Couple of things. First one is of course, early engagement. I used the example of this pre-pandemic mock runs. Early on, lots planning for such a situation is most important, and the same applies also in normal conditions for new products to be launched, etc.

We also see that globalization had an effect on the supply chains overall. That's why it's increasingly important to work with partners which have the broad geographic footprint, who have the global distribution capabilities, but at the same time also who have the capabilities to establish a local network for the final mile because that's typically done on a domestic side.

Another one which I believe is quite important here is pharmaceutical partners should really seek for long term partnership because each new product has its own type of complexity. To reduce that, you have to navigate pertinent challenges, evolving regulatory requirements, and limitations of that. Especially in the pandemic, we have seen how fragile this supply chain can be.

We, for instance, in our industry, in the pharmaceutical industry, have seen that manufacturing was fairly concentrated on specific regions in the world. API production, for instance, happened very much in the Asia region. That by itself created a lot of challenges just to deliver, for instance, because of air freight capacities, but also in those countries, people have been on lockdown just to deliver the APIs for the final production of vaccines. We see already some first trend lines that manufacturers are starting to recognize that and also to start to localize the production.

The last one I just want to mention is a big trend, the personalized medicine. Here, we can definitely see that there are more specific needs per each type of treatment for patients. That by itself means also, let's say, closer production or manufacturing where the patients' population is.

Mike: Jens, you mentioned the globalization. I think we've seen pretty uneven vaccination rates across the world. As you mentioned, there were conversations about manufacturers even starting to build facilities in countries worldwide to help improve that. In the meantime, what are some of the considerations needed, particularly around last-mile delivery in countries where there may not be that cold chain infrastructure? What advice and what value can a logistics partner provide in those situations?

Jens: First of all, sit as soon as possible at the table when you're planning your future distribution, working extensively on various scenarios, just to maintain the supply chain overall. The supply chain can be very complex in many ways. I mentioned earlier this localization or regionalized type of approach that by itself probably needs other suppliers to be qualified, to be engaged, etc.

Mike: You mentioned some of the great collaboration that we've seen across the pandemic. Moving forward, what trends do you anticipate and what specific areas do you expect pharmaceutical companies to invest in, in 2022?

Jens: We have seen that COVID has changed many ways of thinking, and so also biopharma has learned from this. When you look back to the year of the outbreak, the drug development was really disrupted in many ways. In particular, when we're talking about vaccines it was a successful year of developing them. 2021 was then very much dominated by vaccine production and upscaling of it and massive distribution. The pharma industry then reacted, of course, in parallel also in developing new types of therapies, in addition to vaccines.

We have seen already first approved antiviral medication. This antiviral medication, of course, have different, let's say, logistics requirements. Drastically, we can say they reduce on one side the severe progression of COVID infection, but they also drastically have lower requirements in terms of storage and distribution. That's just an example of what happened in the biopharma industry.

What I can also add to that is much more general trends we see right now.

There is more digitalization because, as a pharma company, you need to interact at the end of the day, finally, with your patients. Since one other trend is the personalized medicine overall, there is high demand in getting the patient more engaged and more connected to the company itself.

The other thing is, for sure, a new type of focus in terms of drug development. Despite, of course, COVID, vaccines and therapies, there is now again, and it's now upscaling again, I see more clinical trials now starting in the CNS and the oncology environment overall. This is also proven by industry data. I just read recently a report on global data, which is called the State of the Biopharmaceutical Industry, and they are also mirroring what I'm saying here right now.

Another one is, and I certainly believe this is a game-changer overall for further development, let's say, of future and modern medicine, is the success of this mRNA technology. The technology existed for I believe 30 years, but lately, was the great success of the BioNTech, Pfizer, and the Moderna. We have seen that this is just an accelerator for other indications, mainly in the oncology spectrum.

I have seen clinical trials, by the way, in the past in Phase I and Phase II in the oncology sector as well, but now, there's much more hope into that because there's more money into those developments and also more experience based on the whole lot of these first vaccines on COVID itself. It wouldn't be also not all happy if we find more vaccines to prevent any kind of certain cancer as an example.

And two more I would just call out here, because I would definitely say this is not only the focus of the biopharma industry, but definitely also a challenge for the supply chain industry in supporting that - medication will be more and more personalized. In other terms, it is also called precision medicine, and that requires disruptive solutions from a logistics perspective.

Just to make a very simple example, cell and gene therapies or direct to patient, but let's focus on cell and gene therapies. The patient is now part of the supply chain. Typically, a logistics provider, for instance, distributes to the pharmacy, not directly to a patient, we do this to hospitals. Now, we have to do this in a completely new setting. We might even have to communicate with the patient directly, of course under GDPR requirements. This kind of patient remote management and monitoring is new but also super interesting logistics topic for us.

Mike: You mentioned some of the promising new therapies that are in development, specifically cell and gene therapies. With those therapies, a growing percentage of those products require cold chain storage and transportation, which obviously can introduce additional considerations and challenges. How is the industry preparing to support that?

Jens: Mike, we have seen over the last, I would say 10, 15 years already a super increase in the demand of cold chain storage and transport. This is mainly related to biotech type of products reaching the market. Recent reports show a nearly 50% projected close in global biopharma for cold chain products. Mainly this is in a 2 to 8 degrees Celsius type of temperature range, and that will continue at least until the middle of the decade right now. At the same time, cold chain products will grow at approximately twice the rate compared to non-cold chain overall.

Another fact I just want to mention, in 2020, about 5 billion, or nearly 30%, of the $17.5 billion spent on pharmaceutical cold chain went toward packaging costs, so the shipper itself, the shipper boxes, as well as tracking technology and monitoring solutions merging the temperature, during the transport and the storage, or any other type of monitoring. Likewise, we have seen this in the data logger increase, which goes in parallel with this.

To accommodate the growing cold chain markets, biopharma and their partners need to continue to invest in the facility, additional storage, and packaging capabilities that really support the secure distribution of these products, globally. Long distance, extreme climates, just to mention a few, let's say, characteristics from a logistics provider point of view.

Mike: You mentioned the technology and the increased investment in data loggers, and I think that really speaks to the growing demand for increased visibility across the supply chain. Can you share just a little bit more about what World Courier has done to provide increased visibility and transparency throughout the supply chain? I think more recently even with the development of that control tower in Lithuania.

Jens: Sure. I'm happy to share my insights. The growing demand of monitoring shipments from A to B, be it on long-distance or even short distance based on the cold chain requirements I mentioned earlier, requires another kind centralized, concentrated approach. In this regard, we simply established the control tower.

There's a lot of logistics also behind a shipment. For instance, you need to make sure that you have the right data logger at the right time to place in the packaging. You need to monitor during the transport the temperature, as an example. You probably need to monitor even where the shipment is at the moment. Modern data loggers can also tell you the location, unless they are on an airplane in the sky. Based on this, you can react and you can potentially work on rerouting.

Just to give another example. If, for whatever reason, a shipment is delayed at customs or there's a weather disruption like I experienced today in Germany where I live, where in the northern part of Germany, there are no flights at all at the moment because of a heavy storm. You probably have to reroute and you have to find a new solution, bring those products then, for instance, on a truck or on a van and transport this on road just to get the final destination. Such a central tower can monitor this and for all the shipments which are going in parallel

This is why we established our control tower in Lithuania. We started there distributing vaccines in Norway as a starting point, but meanwhile, we have extended too many more shipments.

Mike: That's excellent, Jens. You really hit on it there, just the impact and importance of having that as part of a contingency plan and using the data that you're able to pull from that control tower to inform what's needed to make sure the shipment arrives on time and in the right condition. What else goes into a contingency plan, and what's needed from the logistics partner to make sure that that shipment does arrive on time?

Jens: First and foremost, you need a business contingency plan. That is an ultimate request. Just think about disruptions also in the past, whatever it was, a volcano outbreak, or these crazy weather conditions you experience very often in North America at the moment, that's number one.

Secondly, you need, of course, qualified packaging material, qualified means be it extreme climate situation where you are starting on a deep-freezing type of country and distributing to the desert in the middle of Africa, as an example. The packaging must still keep the temperature, but because this is highly complex overall, you may have to have stopovers in between where you replenish your ice.

In other words, you need to have in every situation and in every country and every location a backup scenario in case something happens with your packaging. That requires a lot of pre-assessments prior to, let's say, critical shipments. Of course, also, it requires a lot of, let's say, qualified review during your shipments and also constantly adjusting to the needs.

Mike: Just going back to the globalization topic, I think you really offer a unique perspective given your role overseeing operations in 21 countries. Knowing that regulations can vary country to country, what guidance do you provide manufacturers, and how important is it for them to consider that as they're developing their commercialization plan?

Jens: Not only have a good connection to regulatory authorities when it comes to the manufacturing itself and also for the submission and the approval for the product, involve the supply-chain partners early on. Be that on the production side, be it any kind of contributor in the production cycle in itself, the Active Pharmaceutical Ingredient (API) provider, whoever is involved in that, but at the same time, like in our case, transport companies as well. Also, talk to those providers because they also have potential regulatory requirements they need to follow, or they have experience of.

In the case of World Courier as a transport provider - we, of course, need to have the knowledge about the customs regulations. This is most important before you're starting to distribute or ship your products from A to B. Sit together with all your partners early on, and not only think of your own connections, but also regulatory authorities. This is risk mitigation at its best.

Mike: Thanks so much, Jens. This was a really fascinating discussion today. Thanks so much for joining us on the podcast. Hopefully, we'll speak to you again soon.

Jens: Thanks, Mike, for inviting me. It was a pleasure on my side as well.