In recent years, pharmaceutical logistics has become a highly specialized discipline. This is why Marburg site operator Pharmaserv established a separate segment for the pharmaceutical industry’s unique logistical requirements. CHEManager spoke to Thomas Janssen, Managing Director of Pharmaserv and Dr. Martin Egger, Vice President of Pharmaserv Logistics about the background to this step and the new Central Pharma Distribution Center. The interviewer was Dr. Sonja Andres.

CHEManager: At present, special warehouses and logistic centers for pharmaceuticals and biopharmaceuticals are being established in various regions in Germany. In light of your many years of experience in this sector, what do you think is the main reason for this development?

Dr. M. Egger: There are many reasons for this. First, the global demand for medicines has increased continually over the past years, which has resulted in a general and growing increase in market volume. At this point the enormous growth rates of the so-called BRICS countries – about 10% annually – should be emphasized. Due to changing market factors such as expiry of patents, the development of innovative biotechnology products, general cost pressure and a general globalization of processes, manufacturers are being forced to reconsider their supply chains. The issue of outsourcing is becoming increasingly relevant. Professional service providers are looking for opportunities in pharmaceutical logistics.

In addition, the latest changes in regulations – such as the introduction of the GDP Guidelines for drugs in 2013 – have increased requirements on pharmaceutical logistics. This can be seen from the steadily growing demand for temperature-controlled logistics. Although the barriers to entering the market are becoming more challenging, conventional carriers in temperature-controlled transport are moving into the warehousing business. This is because pharmaceutical logistics is seen as an attractive business opportunity in the logistics market. The fact that many companies hope to benefit from this market is clearly reflected in the number of warehouse project developments.

Pharmaserv recently established its logistics segment as a separate brand, Pharmaserv Logistics, at the beginning of 2015. What were the main reasons for this step?

T. Janssen: Over the past years, Pharmaserv has successfully positioned the “Pharmaserv” brand as a competent and innovative partner for technical services and site management. The high level of specialization in the logistics industry and international expansion meant that we needed to differentiate logistics with respect to our other businesses.

A separate market presentation was created, so that we could position our pharmaceutical logistics services more clearly on the market. We found that making this differentiation in a target-oriented manner under the heading “Site Management & Services” was not really feasible. People are not always confident that a local site operator can also be an expert in global pharmaceutical logistics. Because we serve international customers who want to access global markets with their highly sensitive ready-made drugs, innovative active ingredients or clinical studies, clear differentiation and positioning are important – and this was the right choice.

What are the benefits of this differentiation for your existing pharmaceutical and biotechnology customers – and future ones?

T. Janssen: We examined this question thoroughly prior to the brand differentiation. For example, customer surveys showed that small biotechnology companies do not usually have any in-house logistical expertise. The same also applies for laboratories or hospitals. On the other hand, even medium-sized or large companies with their own logistics structures are increasingly reaching their limits. Their own cold storage has become too small, emerging markets are being opened up, or there is simply too little know-how for efficient supply to international wholesalers. This is precisely where we come in – we aim to support each of our customers in the solution of their individual challenges. Deep-rooted and long-term partnerships often result from these joint, and to some extent innovative projects. This results in genuine added value for both parties.

The “Central Pharma Distribution Center” at the Behringwerke location in Marburg was completed at the beginning of 2016 – a major investment. What do you offer your customers there?

Dr. M. Egger: With the extension of our pharmaceutical warehouse at our headquarters in Marburg, we have increased our pharmaceutical logistics area to 8,000 m² and a further 4,000 m² space is available, e.g. for packaging material and storage of hazardous substances. The newly constructed “Central Pharma Distribution Center” combines various logistics services. These range from the production warehouse for solid raw materials and production accessories for merchandise – including medical consumables, laboratory equipment and protective clothing and equipment – sold through the Pharmaserv Shop, to temperature-controlled, ready-made drug warehouses. The production of secondary packaging according to § 13 AMG is also housed in the same building.

In total we have created space for another 4,000 pallets in the 15-25 °C area as well as for 900 pallets in the 2-8 °C area. For all GxP-relevant products, we profit from our validated Warehouse Management System, which enables deep involvement in our customers’ processes. As a central warehouse in the center of Europe we can provide efficient distribution concepts for air, sea or road transport. Our customers can use us as a “pre-wholesaler” to supply their wholesalers or national companies in Germany, Europe, and the rest of the world.

Are there services going beyond those that you previously offered, and if so how are these now being accepted?

Dr. M. Egger: Primarily, our investment was intended to adapt our capacities and infrastructures to put us in a position where we can implement our strategic growth path. In parallel with our building infrastructure we have also further developed our partner network for GDP-compliant distribution. Here, we rely on stable relationships, but we also aim for continuous further development. This can be seen in various aspects, such as the validation of additional pharmaceutical freight carriers to increase our performance capacity, introduction of innovative thermal packaging for air freight, the establishment of certified protection systems for loading sea freight, and so on.

Internally, we have expanded our expertise in customs formalities, so that with our status as an Authorized Economic Operator (AEO-F) we can even simpler processes for our customers. In the field of air freight we are certified as a Regulated Agent (Reg-A). Our customers already benefit from these developments. At present we are in the process of adapting our infrastructure to GMP-compliant storage of hazardous substances and dispatch of actively cooled air freight containers directly from our warehouse.

What is new, and very important to mention, is the change in our mindset. Previously, we have emphasized our expertise in “Pharma Logistics” or “Cold Chain Solutions” for our customers. We are now increasingly attempting to discover exactly what our customers are concerned about and what gives them sleepless nights. We have recognized that our portfolio is attractive to international customers who wish to expand their business in Europe. This is why we are attempting to address international target customers and communicate to them the advantages of having us as a distribution partner.

What are the special features and advantages of the Pharma Distribution Center?

T. Janssen: Using a facility as a medicine warehouse requires us to maintain precisely defined temperature ranges in order to prevent damage to the products. This in itself is a major technical challenge in a large warehouse. Of course there is also the exacting requirement for reliability of supply, which we are well aware of and can meet as a pharmaceutical production site operator.

The building has excellent insulation and is equipped with concrete core activation. Because of this, heating and cooling energy can be consistently provided and stored for a long time. This allows us to use more renewable energy. Our combination of insulation, ice storage, solar absorbers and heat pumps enables us to obtain approx. 85% of the required heating and cooling energy from the sun.

This protects the environment while also demonstrating how valuable it is for us to use our own expertise as building and plant operators.

How do you rate the German and international market in terms of sensitive and temperature-critical drugs? What are the consequences for logistics?

Dr. M. Egger: Demand within the pharmaceutical and biotechnology sectors for specialized, efficient and temperature-controlled logistics solutions will continue to grow. In addition to the GDP guideline, the cost pressure from the generics sector will force pharmaceutical companies to closely examine their own logistics and look for new and cheaper solutions. We are already seeing a clear trend toward smaller batch sizes, which is shown by a shift in demand from full-truck to less-than-truckload and parcel service solutions. In addition, we also see a trend away from air freight toward cheaper sea freight. No matter what challenges the future presents to our customers, we are here to face them together.