Biopharmaceutical Third-party Logistics Market Size, Share & Trends Analysis Report By Supply Chain (Cold Chain, Non-cold Chain), By Service Type (Transportation, Warehousing & Storage), By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global biopharmaceutical third-party logistics market size was estimated at USD 125.8 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 6.0% from 2023 to 2030. The rising trend of outsourcing logistics, the focus of pharmaceutical players on their distribution network owing to its strong sales numbers, and a rise in the number of biosimilar launches are some of the key factors driving the market. The COVID-19 pandemic significantly impacted the market growth. During the development of the COVID-19 vaccine, the pharmaceutical and cold chain sectors were pushed to innovate, creating temperature-controlled packages to meet the needs of new deep-frozen COVID-19 vaccine storage and increased demand for existing supplies. A sudden surge in the demand for cold chain logistics was observed during the pandemic. Growth in the manufacture and distribution of the COVID-19 vaccine is expected to boost the biopharmaceutical 3PL market during the forecasted period. Technological advancements are also one of the key factors driving the adoption of temperature management logistic services. Technologies, such as warehouse robotics, mobile cloud solutions, data mining, and real-time monitoring, have changed the overall logistics industry to a great extent. These advanced vehicles are designed to automate and provide temperature control systems during transportation that help in reducing complexities, human error, and damage to products in transit.

Moreover, the demand for reverse logistics has increased in recent years due to product recalls. Product recall occurs due to shorter product life cycles, the growing stock of unused drugs, and increasing product choices. Major factors responsible for the rising application of reverse logistics include increasing concern about the product environment. Cost is also a key factor boosting the demand for reverse logistics. Furthermore, several initiatives undertaken by the key players are expected to boost market growth. For instance, in September 2022, CubeWorks introduced the CubiSens XT1, for cold chain logistics, which offers product-level monitoring of biopharmaceutical goods for temperature compliance and quality assurance during their full lifecycle.

Moreover, in November 2022, Celcius Logistics introduced its Hyper-Local temperature-controlled delivery services for pharmaceutical and food orders. The demand for outsourcing 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. Furthermore, the big biopharma companies are either agreeing or are outsourcing to 3PL service providers to reduce the overall operating cost to promote lean management and application of six sigma in their business operations. This, in turn, is expected to lower the prices of pharmaceutical products, which is a positive welcome for consumers worldwide. This has uplifted the demand for 3PL services among life sciences companies.

Supply Chain Insights

The non-cold chain logistics segment accounted for the largest share of more than 79% of the global revenue in 2022. This is attributed to an increase in pharmaceutical sales through distributors. 3PL services provide greater scalability, and the higher visibility reduces overall operating costs and helps develop a stronger logistics network with higher returns and lower risks. Therefore, 3PL has become an integral part of the business strategy of pharmaceutical companies. The other factor that has propelled the non-cold chain segment’s growth is the rising number of SKUs per distributor that do not require temperature control transportation, unlike biologics.

The cold chain segment is projected to register the fastest CAGR over the forecast period. This is majorly owing to the rising demand for a new class of drugs, called biologics that have shown tremendous growth over the past few years. These drugs require both temperature and time-controlled distribution, however, apart from biologics, the market has seen the occurrence of different types of precision medicine inventions, such as biomarker testing, cellular therapies, blood products, certain vaccines, and regenerative medicine in the form of stem cells.Currently, the temperature during transportation is managed with various temperature data loggers attached to the shipments that record the temperature reading of the product.

Moreover, advancements in data loggers, such as the capability to measure vibration, humidity, temperature, and shock are anticipated to bode well for the demand in the near future. Moreover, logistics companies are further implementing RFID hardware coupled with software solutions that make it easy to gather information. The ongoing advancements and growing investment in temperature control technologies are among the few factors that are anticipated to drive the cold chain segment.

Service Type Insights

The warehousing and storage segment dominated the market in 2022 and accounted for the largest share of more than 43.30% of the global revenue. This is attributed to the high demand for 3PL services from the pharmaceutical and healthcare industry. To reduce the operating costs and the company’s overheads, the life sciences companies are opting for 3PL services. With a surge in demand, the service providers have enhanced their offerings with many value-added services, such as warehousing and packaging.Moreover, to minimize the hassle and reduce the turnaround time, the providers have installed barcode scanners and robots for picking and aligning the products from distant locations. The others segment is projected to expand at the fastest CAGR over the forecast period.

Packaging, custom & duty management, procurement services, and a few other value-added services are included in this segment. Packaging is one of the crucial elements of pharmaceutical logistics since the transportation of drugs not only depends on the storage facilities but primarily on the packaging of the drug. On the other hand, the transportation segment is likely to register a significant growth rate from 2023 to 2030. Biopharmaceutical companies outsource their transportation requirements to third-party service providers for cost reduction. In addition, the lack of internal capabilities is another major factor contributing to the growth of transportation outsourcing. By outsourcing transportation, biopharmaceutical companies cannot only improve the performance of their supply chain management system but can also focus on their core competencies.

Regional Insights

North America dominated the market in 2022 and accounted for the major share of more than 42.0% of the global revenue. This is attributed to the dominance of the region in the biologics and pharmaceutical drugs market and an increase in exports and imports for biopharmaceuticals. Furthermore, owing to high healthcare expenditure, the adoption of advanced technologies is quite high in the region. Thus, for the improvement of warehousing and transportation, North America-based pharmaceutical companies are relying more on 3PL service providers, which is driving regional growth. In addition, the presence of major players in the region supports itsgrowth. Asia Pacific is expected to witness the fastest CAGR over the forecast period.

The growing demand for medicines among the aging population, adoption of technologically advanced services, and growing economic conditions in emerging countries, such as China and India, are among the few factors responsible for its fastest growth. Furthermore, an increasing number of patent expirations in the coming years indicate a major shift in drug sales from the original brand manufacturer to generic ones. This factor is anticipated to boost the sales and import & export of pharmaceutical products. A rising number of diseases is also contributing to the demand for biologics and pharmaceuticals. For instance, the demand for insulin is more in Asia Pacific due to the high number of type 2 diabetes patients.

Key Companies & Market Share Insights

The market is highly fragmented with the presence of a large number of players. This fragmentation causes hindrances for big players to enter a few countries across the globe. Thus, the big players are undergoing consolidation that will help them accept modern technologies from small or regional players and expand their global presence. For instance, in May 2023, DHL introduced a temperature-controlled air freight service in Indianapolis to help with the transportation of medications.

With the USD 1.5 million initiative, it would be possible to extend its specialized life sciences and healthcare logistics network throughout the entire continental U.S. and Puerto Rico. The company’s expansion in central Indiana enhances the region’s position as a significant market for the development, production, and transportation services for life sciences, healthcare, and pharmaceutical firms. Some of the key players in the global biopharmaceutical third-party logistics market are:

• DHL International GmbH

• SF Express

• United Parcel Service of America, Inc.

• AmerisourceBergen Corp.

• DB Schenker

• Kuehne and Nagel

• Kerry Logistics Network Ltd.

• Agility

Biopharmaceutical Third-party Logistics Market Report Scope

Global Biopharmaceutical Third-party Logistics Market Segmentation

This report forecasts revenue growth and provides an analysis of the latest trends in each of the sub-segments from 2018 to 2030. For this report, Grand View Research has segmented the global biopharmaceutical third-party logistics market based on supply chain, service type, and region:

• Supply Chain Outlook (Revenue, USD Billion, 2018 - 2030)

  • Cold Chain

  • Non-cold Chain

• Service Type Outlook (Revenue, USD Billion, 2018 - 2030)

  • Transportation

    • Air Freight

    • Sea Freight

    • Overland

  • Warehousing & Storage

  • Others Services

• Regional Outlook (Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • UK

    • Germany

    • France

    • Italy

    • Spain

    • Denmark

    • Sweden

    • Norway

  • Asia Pacific

    • India

    • China

    • Japan

    • Australia

    • Thailand

    • South Korea

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East & Africa

    • South Africa

    • Saudi Arabia

    • UAE

    • Kuwait