Biopharmaceutical Third Party Logistics Market Size, Share & Trends Analysis Report By Supply Chain (Cold Chain, Non-cold Chain), By Service Type (Transportation, Warehousing And Storage), By Region, And Segment Forecasts, 2021 - 2028

Report Overview

The global biopharmaceutical third party logistics market size was estimated at USD 94.4 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 5.6% from 2021 to 2028. The rising trend of outsourcing logistics, the focus of pharmaceutical players on their distribution network owing to its strong sales numbers, and the rise in the number of biosimilar launches are some of the key factors driving the market.

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 industries 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.

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 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 taken by the key players are further expected to drive the market for biopharmaceutical third-party logistics (3PL) 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 third party logistics services among life sciences companies.

The coronavirus pandemic led to the disruption of the supply chain of the biopharmaceutical industry in 2020. Biopharmaceutical third-party logistic players helped to minimize supply disruptions and prioritizing critical care drugs and thus, played an important role in the fight against COVID-19. They were categorized into essential services during the pandemics, thus allowing them to operate and maintain revenue growth. Such favorable government initiatives and growing demand for domestic logistics will augment the growth of the market for biopharmaceutical third-party logistics (3PL) over the forecast period.

Supply Chain Insights

In 2020, the non-cold chain logistics segment dominated the market for biopharmaceutical third-party logistics (3PL) and contributed to the largest revenue share of 80.8%. This is owing to an increase in pharmaceutical sales through distributors. 3PL services provide greater scalability, higher visibility, reduce overall operating costs, and help 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 is the growing number of SKUs per distributors that do not require temperature control transportation, unlike biologics.

The cold chain is projected to be the fastest-growing supply chain segment with a CAGR of 8.6% in the market for biopharmaceutical third-party logistics (3PL) 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 attributes that are anticipated to drive the cold chain.

Service Type Insights

In 2020, the warehousing and storage segment dominated the market for biopharmaceutical third-party logistics (3PL) and held the largest revenue share of 43.6%. 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 third party logistic 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 to reduce the turnaround time, the providers have installed barcode scanners and robots for picking and aligning the products from distant locations.

The other segment is projected to expand at a lucrative CAGR of 6.4% in the market for biopharmaceutical third-party logistics (3PL) over the forecast period. Packaging, custom and duty management, procurement services, and a few other values added services are included in this segment. The 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 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 dominated the biopharmaceutical third-party logistics (3PL) market and accounted for the largest revenue share of 41.5% in 2020. 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. Additionally, the presence of major players is also responsible for the growth of the market for biopharmaceutical third-party logistics (3PL) in the region.

In Asia Pacific, the market for biopharmaceutical third-party logistics (3PL) witnessed the second largest revenue of USD 15.4 billion in 2020 and is also expected to witness the fastest CAGR of 7.2% over the forecast period. 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 rate.

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 and export of pharmaceutical products. Additionally, a 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 for insulin is more in the Asia Pacific region, owing to the high number of patients diagnosed with type 2 diabetes.

Key Companies & Market Share Insights

The market for biopharmaceutical third-party logistics (3PL) 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 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. Some of the prominent players in the biopharmaceutical third-party logistics market include:

• FedEx.

• DHL International GmbH

• SF Express

• United Parcel Service of America, Inc.

• AmerisourceBergen Corporation

• DB Schenker

• KUEHNE + NAGEL

• Kerry Logistics Network Limited

• 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 2016 to 2028. For the purpose of this study, Grand View Research has segmented the global biopharmaceutical third-party logistics market report on the basis of the supply chain, service type, and region:

• Supply Chain Outlook (Revenue, USD Billion, 2016 - 2028)

  • Cold Chain

  • Non-cold Chain

• Service Type Outlook (Revenue, USD Billion, 2016 - 2028)

  • Transportation

    • Air Freight

    • Sea Freight

    • Overland

  • Warehousing and Storage

  • Others

• Regional Outlook (Revenue, USD Billion, 2016 - 2028)

  • North America

    • U.S.

    • Canada

  • Europe

    • Germany

    • France

    • Italy

    • Spain

    • U.K.

  • Asia Pacific

    • China

    • Japan

    • India

    • Australia

    • New Zealand

  • Latin America

    • Brazil

    • Mexico

    • Argentina

  • Middle East & Africa

    • South Africa

    • Saudi Arabia

    • UAE