May 17, 2020

FedEx: More temperature-sensitive transportation needed for European pharmaceuticals

European procurement
4 min
Nordics Gateway Continues Company’s European Growth Program
We will soon be reaching a milestone year for the European pharmaceutical industry. In the 80/90s there was a peak in new pharmaceutical products and as...

We will soon be reaching a milestone year for the European pharmaceutical industry. In the 80/90s there was a peak in new pharmaceutical products and as a number of key drugs face the expiry of their patents over the next year, a strong opportunity is about to open up for manufacturers to launch their own generic versions.

Pharmaceutical research is expensive and once a patent has been granted, it lasts for only 20 years. During that time, the original company controls the market, however often more than 12 years of the 20 is taken up in the clinical trials process which, according to a UK estimate, can cost more than £1billion to bring one drug to market. Outgoings are high and profitability challenged.  More often than not, once the Research & Development phase is complete, the company is only left with ten years on the patent to go to market and make a return on its investment. 

Things are definitely changing in the branded pharma industry due to a combination of this “patent cliff” as well as increasing regulatory controls, resulting from the updated Good Distribution Guidelines (GDG).  As these ”Blockbuster” drugs come off patent, generic manufacturers will begin marketing these medicines , usually at a much lower price since they do not have Research & Development costs to recover.

This is creating increasing cost pressures on the manufacturing and supply chain processes in the industry. The GDG are also making the regulatory environment more complex, with a risk-based assessment of supply chain processes, and additional focus on maintaining temperature ranges aligned to a drug’s stability data. Contrary to the downward pressures on the cost of generic drugs, GDG changes often increase the transportation complexity and transportation costs, hence impacting on overall production charges.

As a result of these market forces, we have noticed that branded pharma companies are therefore becoming more cost conscious in their transportation decisions.  More than ever they need to maintain a high level of visibility, quality and reliability in order to satisfy their Quality Assurance teams, but without breaking the bank. This is shaking up the pharmaceutical supply chain and new business models are now emerging to support the evolving transportation requirements. 

Transportation Consideration

Industry analysis estimates that increased demand for general generic pharmaceutical products is driving an increased need for temperature-sensitive healthcare transportation; estimating an annual growth of 13 percent between 2014 and 2019 in the cold chain market.

This rise in manufacturing type brings with it a specific set of needs surrounding quality as well as more cost efficient freight.  Consumers still expect high levels of visibility, combined with fast and reliable delivery.  This is why pharma companies are increasingly outsourcing their transportation requirements and seeking alternative solutions to the relatively high cost, “White Glove” services of a speciality courier.

We’ve recently seen a new breed of “Express Plus” service providers developing in the market, enriching standard, reliable express delivery services with value-added, visibility, temperature control and intervention solutions.  As a result, manufacturers are now able to depend on express transportation and value added services to ensure their drugs reach the destination on time and in the right condition.

For a company like FedEx, this has meant tapping into its innovative capabilities to create state-of-the-art sensor-based monitoring tools, specialised packaging that uses liquid nitrogen vapor to keep biological samples deep frozen, and one-click packaging solutions to keep clinical trial samples cold. 

In addition, investments have been made in cold chain assets, for example fridges, freezers and cold rooms, as well as rolling out extensive staff training to effectively handle these important and often sensitive shipments. These new innovations are all brought together by control-tower-like options such as FedEx Priority Alert TM, which provides advanced proactive monitoring and notification of the status of shipments. These innovations help a shipper better manage and gauge product integrity. 

With many blockbuster drugs on the brink of losing their European patents], combined with fierce competition across the generics industry, large multinationals and generic manufacturers need to ensure they have the right shipping infrastructure in place to capitalise on this small yet highly lucrative window of opportunity.

Patent Cliff: Next Steps

Speed, reliability and value of service are the new buzzwords for transportation solutions for the pharma industry.

Generic pharma companies, as well as the original patent holders, need to ensure they can ship their pharma products to wholesalers, retail pharmacies and distribution depots throughout Europe, and beyond, so this small window of opportunity can be capitalised upon. The successful companies will be those that are able to maintain regulatory compliance and product integrity, while managing cost throughout the process by exploring “Express Plus” models that are presenting compelling new alternatives on the market.

By Toby Hay, Global Sales Manager, FedEx HealthCare Solutions.

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Jun 16, 2021

EU and US agree end to Airbus-Boeing supply chain tariffs

3 min
Supply chains embroiled in Airbus-Boeing dispute will no longer be impacted by $11.5bn tariffs imposed on food and beverage, aircraft and tobacco

The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic. 

Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years. 

It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC. 

The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn. 

In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products. 

Boeing-Airbus dispute by the numbers  

  • The dispute began in 2004
  • Tariffs suspended for 5 years 
  • $11.5bn worth of goods affected by tariffs
  • $3.3bn in duties paid by businesses to date 
  • 15% levy on aircraft and 25% on non-aircraft goods suspended

Both sides welcome end to tariffs 

European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.

“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.

Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”. 

The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."

This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.

Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”

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