A healthy business

Exel looks at trends in the healthcare supply chain as pharmaceutical businesses seek wider reach and lower costs.

Healthcare companies and their supply chain partners are working together to drive up the efficiency of the supply chain. Exel, a provider of dedicated and multi-user facilities and distribution, is constantly looking to increase its healthcare solutions and develop new channels of distribution to better serve the changing needs of its pharmaceutical customers.Streamlining operations and reducing costs is one of the major drivers for change within the healthcare logistics sector, according to Graham Inglis, Exel's president, Healthcare, Worldwide. 'As the global healthcare sector continues to consolidate, companies are reviewing their costs and manufacturing structures and it is here that supply chain partners can help them develop, manage and maintain more efficient networks.'

Inglis notes that the leading pharmaceutical and medical device companies are now more flexible in their approach - highlighting that they are much more comfortable with supply chain services, such as shared-user warehousing and campus solutions specially designed to reduce distribution costs within the supply chain.

An area of growing concern for pharma companies is parallel imports of products. As well as having an impact on the profitability and ultimately the r&d expenditure of pharmaceutical manufacturers, such 'grey imports' often fall outside recognised drug controls and there is the possibility of counterfeit product being introduced to the supply channel or product deteriorating as it travels over long distances.

Inglis says: 'An important growing trend in the marketplace is the rise of the direct-to-pharmacy distribution channel - reducing the reliance on wholesalers and intermediaries to distribute medical products to pharmacies, hospitals and clinics. For Exel this is a key opportunity to grow our healthcare offer, as we deal with 17 of the top 20 healthcare companies worldwide and have the global infrastructure in place - including the relevant statutory licences for controlled drugs or hazardous materials storage - to provide a single service from manufacturer to customer without breaking the supply chain. The service ensures product integrity, eliminates grey market trading, provides transparency of distribution and, importantly, delivers savings on wholesalers' margins.'

key trends

The company points to its recent acquisition of Pharma Logistics in Italy as the way ahead, although in some European nations, notably the UK, many wholesalers own pharmacies themselves and are sure to retain their dominance for a while longer.

Another key trend cited by Exel is the growing requirement for temperature-assured distribution. A number of logistics companies, Exel among them, are investing in chilled and frozen distribution equipment and infrastructure to maintain the temperature of pharmaceutical products from point of manufacture to point of use. In the UK, for instance, Exel offers Biocool, a temperature-controlled distribution capability for products being delivered to hospitals, surgeries, high-street pharmacies and homes. Additionally, Exel's fleet of multi-temperature trucks allows temperature deliveries ranging from -25°C to +25°C on the same vehicle. This means lower costs through improved vehicle utilisation and assured temperature distribution by continuous temperature mapping.

'There is growing evidence that the leading healthcare providers are adopting a more holistic approach to freight management too,' adds Inglis. 'Specifically, they are looking to buy airfreight on a global basis across all their subsidiary companies and for supply chain partners to shape up and be more responsive on pricing and service quality.

'Exel has a global account management structure that facilitates the delivery of consistent global services and we have invested in visibility tools to provide end-to-end tracking with the opportunity for intervention if, for example, medical supplies are required in an emergency.'

on-site experts

The company is also locating customer service units on pharmaceutical manufacturing sites, where its freight teams act as on-site transportation experts. Teams are connected to Exel's global freight management services, and in turn to site users via electronic booking processes.

Exel has also established a freight operation to support a range of customers at its shared-user healthcare site in the Netherlands.

The demand for more flexibility in the supply chain has also resulted in the provision of new contract logistics services in healthcare - packing, repacking and labelling or relabelling in the US, for instance. Exel has developed a make-to-order contract-packing capability for companies such as Bayer, which means it can produce display packaging within its warehouse facility, ready to be shipped with product when a promotion is launched.

clinical trials

Another sub-sector for the company is the application of traditional international airfreight, break-bulk and cross-dock services to support clinical trials - for example, by providing the time-sensitive delivery and collection of diagnostic kits from a single US manufacturing plant to and from thousands of European test sites.

Healthcare products manufacturer Smith & Nephew has awarded Exel a five-year contract to operate a national distribution centre in Madrid, Spain, thereby centralising its logistics activities in this key market.

central hub

The site in Madrid is the central hub for Smith & Nephew's distribution to its Spanish market and is the central receiving location for manufactured products from the company's factories and suppliers for onward distribution throughout Spain. Exel's specialist healthcare team in Spain is also providing a range of specialist services including inventory management, pick-and-pack activities, over-labelling and returns management.

The Madrid facility meets the required quality and regulatory requirements for both medical devices and ethical pharmaceuticals.

Ferran Boya, logistics manager, Smith & Nephew, said: 'Exel was able to offer us a solution at the right cost, bringing together all our Spanish warehousing operations under one roof. This has improved the quality and efficiency of our supply chain operations in the region.'

As a result of a project to review its European supply chain, global healthcare company, Baxter, has awarded Exel a five-year contract to manage its freight and transport operations across all off its manufacturing plants throughout western Europe. A second contract sees Exel operating across parts of central and eastern Europe, including Russia.

full service

Exel will operate as a fourth party logistics provider (4PL) to the producer of medical devices and pharmaceuticals, which means it will manage and control the strategic, tactical and operational elements of the customer's transport across the region. This includes transport scheduling, carrier management, demand and capacity management systems. Products moved include pharmaceuticals and medical devices for Baxter's bioscience, medication delivery, renal and trans-fusion therapies businesses.

The partnership between Exel and Baxter began in 2004 with a pilot operation managing the roadfreight between Baxter's manufacturing plant in Italy and distribution centres across parts of western Europe.

This joint project was a success and in May 2005, Baxter asked Exel to commence service encompassing all its other manufacturing sites across western Europe and parts of eastern and central Europe. Opportunities to expand this service further in central Europe, Middle East and Africa are now being evaluated.