Biopharmaceutical Third Party Logistics (3PL) Market Size, Share & Trends Analysis Report By Supply Chain (Cold Chain, Non-cold Chain), By Service, By Region, And Segment Forecasts, 2019 - 2025

Industry Insights

The global biopharmaceutical third party logistics market size was estimated at USD 86.37 billion in 2018 and is projected to expand at a CAGR of 4.9% over the forecast period. Rising trend of outsourcing logistics, growth in pharmaceutical distribution network owing to its strong sales numbers, and rise in number of biosimilar launches are some of the key factors driving the market.

Technological advancements is also one of the key factors driving adoption of temperature management logistic services. Technologies, such as warehouse robotics, mobile cloud solutions, data mining, and real-time monitoring has changed the overall logistics industries to a great extent. These advanced vehicles are designed to automate the temperature control systems during transportation that helps in reducing complexities and human error. 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 and thus require monitoring up to the stage of delivery through a tracking device. For instance, Onset, a supplier of monitoring solutions and data logger 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 the android devices.

Additionally, 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 a full time support to the shipper from the cold chain experts and alerts regarding temperature excursions and many other attributes. 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 taken by the key players are further expected to drive the biopharmaceutical third party logistics (3PL) 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 entering into an agreement or are outsourcing to 3PL service providers to reduce the overall operating cost, which would result in lower prices of pharmaceutical products. This has uplifted the demand for third party logistics services among life sciences companies.

Supply Chain Insights

In 2018, non-cold chain logistics segment witnessed the largest revenue at USD 70.76 billion owing to increase in pharmaceutical sales through distributors. 3PL services provides greater scalability, higher visibility, reduces overall operating cost, 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 the pharmaceutical companies. The other factor that has propelled the non-cold chain segment is the growing number of SKUs per distributors that do not require temperature control transportation unlike biologics.

Cold chain logistics is projected to be the fastest growing supply chain segment over the forecast period. This is majorly owing to the rising demand for new class of drugs, called biologics that has 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 with the shipments that records 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 few attributes that are anticipated to drive the cold chain logistics market.

Service Type Insights

In 2018, warehousing and storage segment held the largest market share in terms of revenue with USD 37.84 billion. This is attributed to a large demand for 3PL services from pharmaceutical and healthcare industry. To reduce the operating costs and the company’s overheads, the life sciences companies are opting for third party logistic services. With surge in demand, the service providers have enhance their offerings with several value added services, such as warehousing and packaging. Moreover, to minimize the hassle and to 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 a lucrative CAGR of 5.8% over the forecast period. Packaging, custom and duty management, procurement services, and few other value added services are included in this segment. Packaging is one of the crucial element 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 are investing a lot 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.

Regional Insights

North America witnessed the largest revenue of USD 27.78 billion in 2018. This is majorly attributed to the dominance of the region in biologics and pharmaceutical drugs market and increase in exports and imports for biopharmaceuticals. Furthermore, owing to higher disposable income, 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. Additionally, the presence of major players in these regions is also responsible for its largest market share.

Asia Pacific witnessed the second largest revenue of USD 26.92 billion in 2018 and is also expected to witness the fastest CAGR of 6.2% over the forecast period. Growing demand for medicines among aging population, adoption of technologically advanced services, and growing economic conditions in emerging countries such as China and India are among few factors responsible for its fastest growth rate.

Furthermore, increasing number of patent expirations in the coming years indicates a major shift in drug sales from the original brand manufacturer to generic ones. This factor is anticipated to boost the sales and import and export of pharmaceutical products. Additionally, rising number of diseases is contributing to the rising demand for biologics and pharmaceuticals, which is one of the key regional growth drivers. For instance, the demand of insulin is more in the Asia pacific region since owing to the high number of patients diagnosed with type 2 diabetes.

Biopharmaceutical Third Party Logistics Market Share Insights

Some of the key market players are DHL International GmbH., SF Express, United Parcel Service of America, Inc, AmerisourceBergen Corporation, DB Schenker, Kuehne and Nagel, Kerry logistics network limited and Agility. Furthermore, the market is fragmented with the presence of a large number of players. This fragmentation causes hindrances for big players to enter into a few countries across the globe. Thus, the big players are undergoing consolidation that will help them accept modern technologies from the small or regional players and expand their global presence. For instance, in 2017, LeK pharmaceuticals—the subsidiary of Novartis, consolidated its logistics operations in Slovenia through a deal with third party logistics, Kuehne and Nagel.

 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 2014 to 2025. For the purpose of this study, Grand View Research, Inc. has segmented the global biopharmaceutical third party logistics market report on the basis of supply chain, service type, and region:

• Supply Chain Outlook (Revenue, USD Million, 2014 - 2025)

  • Cold Chain

  • Non-cold Chain

• Service Type Outlook (Revenue, USD Million, 2014 - 2025)

  • Transportation

    • Air Freight

    • Sea Freight

    • Overland Transportation

  • Warehousing and Storage

  • Others

• Regional Outlook (Revenue, USD Million, 2014 - 2025)

  • 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