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, 2022 - 2030

Report Overview

The global biopharmaceutical third-party logistics market size was estimated at USD 119.8 billion in 2021 and is projected to expand at a compound annual growth rate (CAGR) of 5.9% over the forecast period. 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. In 2020, the coronavirus pandemic disrupted the biopharmaceutical industry’s supply chain. 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.

The industry responded to the opportunity, collaborating in previously unseen ways to make 2021 a better year. 3PL companies in the biopharmaceutical industry assisted in reducing supply disruptions and prioritizing critical care medications and so played a crucial role in the fight against COVID-19. During the pandemic, they were classified as essential services, allowing them to continue operating and growing income. Such favorable government initiatives and growing demand for domestic logistics will augment the growth of the market over the forecast period. The future seems lucrative for the market with the retraction of government regulations related to transportation & shelter-in-place mandates.

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 third-party logistics (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.

Thus, these monitoring solutions allow visibility that can converse breaches through automatic alerts by providing information to execute contingency plans. Pharmaceutical products are often temperature-sensitive, which require monitoring up to the stage of delivery through a tracking device. For instance, Onset, a supplier of monitoring solutions and data loggers introduced the InTemp CX400 series mobile app for its pharmaceutical cold chain monitoring products. The app allows users to view temperature data from CX400 loggers and set alarms from their mobile devices to get notifications regarding temperature excursions.

The company recently announced its availability for Android devices. In addition, companies like DHL have introduced a new Android and iOS app, LifeTrack that allow its users to access the online cold chain tracking platform to provide the healthcare and life science shippers an overview of their shipments. It also provides full-time support to the shipper from the cold chain experts and sends out alerts regarding temperature excursions or any other activities. In the first quarter of 2018, DHL invested in Near Field Communication (NFC)-based IoT devices in vehicles for capturing data using mobile apps.

These initiatives by the key players are expected to drive the market over the next few years. 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.

Service Type Insights

The warehousing and storage segment dominated the market in 2021 and accounted for the largest share of more than 43.00% of the global revenue. This is attributed to a large 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.

Pharmaceutical companies pay a lot of attention to packaging quality, in terms of purity, uniformity, shelf life, integrity, and packaging standard of their products. This is thus expected to boost the market over the forecast period. The 3PL service providers investing in providing value-added services is another key market driver. For instance, Expeditors, a service-based provider of value-added services ranging from simple to complex, offers a range of logistics delivery models that enhance customer services while mitigating transportation and inventory costs.

Supply Chain Insights

In 2021, the non-cold chain logistics segment accounted for the largest share of more than 80.00% of the global revenue owing to an increase in pharmaceutical sales through distributors. 3PL services provide greater scalability, and 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 growing 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 the 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 near future. Moreover, the 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.

Regional Insight

North America dominated the global market in 2021 and accounted for the maximum share of more than 42.0% of the global revenue. This is majorly 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 services providers, which is driving the regional growth. In addition, the presence of major players in these regions is also responsible for its largest market share. 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 the Asia Pacific due to the high number of type 2 diabetes patients.

Key Companies & Market 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 August 2020, United Parcel Service of America, Inc. announced that it is developing two massive freezer farms competent for super-cooling lakhs of doses of COVID-19 vaccine in preparation for the day when the medicine will need to be delivered at high speed around the world. 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

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global biopharmaceutical third-party logistics market report 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

    • U.K.

    • Germany

    • France

    • Italy

    • Spain

  • Asia Pacific

    • China

    • Japan

    • India

    • Australia

    • New Zealand

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East & Africa

    • South Africa

    • Saudi Arabia

    • UAE