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Pharma Logistics
logistics firm that already has undergone the process lets life sciences companies leverage those experiences and thereby smooth their own entry into new regions.
Those regulations may affect the distribution network a company establishes. "Who moves goods and how they are moved varies and affects other strategic decisions," Hook says. "For example, in India, product is taxed as it moves across state borders. In China, healthcare is managed through hospitals, not the physicians," so manufacturers deal with fewer, but more powerful, buyers. In Brazil, the tax system causes manufacturers to ship directly to retailers to bypass wholesalers and one level of sales tax. Brazil also requires warehousing in the same state as the manufacturing facility. DHL began its PharmaShare services in Brazil, with consolidated warehousing and shipping, to help its clients meet those requirements and conserve capital, Jose Fernandes, VP
of operations for DHL Supply Chain Brazil, says. PharmaShare is also available in Mexico and is launching in the United States now.
THE INCREASE IN MODELING & SIMULATIONS
Contract logistics is evolving to integrated logistics so that more aspects of the supply chain are handled by a single logistics provider. UPS and DHL, for example, each work closely with clients to design a network that is most effective for the region of interest and for clients' own particular needs.
Logistics and business model simulations provide a way of smoothing expansions by helping managers identify the right questions, asserts Claire Cordeaux, leader of the healthcare practice for SIMUL8 Corp. "Anywhere there is a flow of events — people, product, process design — simulations can be used to see beyond volumes to identify bottlenecks, timetables, and other factors, enabling you to experience the problems you may encounter before going live," she says. Modeling is used often as a learning device, to enable dialog and work out the real questions that must be answered.
"We're seeing a sudden interest from medical device and pharmaceutical companies in using simulations to evaluate the economics of drugs in specific markets," Cordeaux adds. Economic evaluations, ideally, include the healthcare model, pricing, volume, patient conditions, and access — many of the same parameters that also figure into logistics decisions. Modeling also can become a value- added service for manufacturers to help their own clients develop
more efficient business and distribution models.
"We're seeing a sudden interest from medical device and pharmaceutical companies in using simulations to evaluate the economics of drugs in specific markets."
Claire Cordeaux, healthcare practice leader, SIMUL8 Corp.
THE BENEFITS OF SHARED WAREHOUSES "I see hesitancy among the largest life sciences companies to outsource logistics and transportation to one party," according to Richard Smith, managing director for life sciences specialty services at FedEx Express. The integration trend is growing, though, as life sciences companies and logistics providers expand into the interiors of developing regions. UPS, for example, launched express flights to Chengdu, in western China, last July. Logistics providers are, increasingly, developing secure, shared warehouse facilities that meet the requirements of life sciences regulators and provide the flexibility that companies need as they enter new markets. For example, "UPS has nearly 5 million square feet of healthcare distribution
centers around the world and is continuing to build out. Five or six more facilities are planned for the next year," Hook says. Likewise, DHL has expanded Brazilian warehouses beyond Sáo Palo and Rio to include midwestern and southern Brazil.
PUBLIC HEALTH PROGRAMS: AN ENTRANCE TO EMERGING MARKETS
Chembio Diagnostics Systems, Inc. entered emerging regions by working through public health programs. "Chembio's tests for leishmaniasis, leptospirosis, HIV, and tuberculosis each have FDA approval, but a large percentage of our non-U.S. sales have been in Africa," according to Larry Siebert, president and chairman. There, the President's Emergency Plan for AIDS Relief (PEPFAR) provides Chembio's AIDS point-of-care tests to the various nations' ministries of health from a central distribution point in Africa. The company also works with an Ethiopian distributor that sells directly to the Ministry of Health.
To access the Brazilian market, Chembio works with the Oswaldo Cruz Foundation. Its tests are assembled there under the Foundation's brand. As Siebert explains, "We shipped the components and trained the locals to assemble and manufacture our product there. For us, there's no concern about distribution or quality."
In those emerging markets, track-and-trace requirements are minimal, Siebert recounts. "We have lot numbers," but more
January 2012 LifeScienceLeader.com 41