Cost Cutting Measures Adopted By Pharmaceutical Companies Are Fueling The Bio-Pharma Logistics’ Market Growth

9 Dec, 2019

The global pharmaceutical drugs and biologics logistics market was estimated at $87.4 billion in 2019, and is expected to grow to $95.9 billion in 2021 at an annual growth rate of more than 4.5%. Pharmaceutical companies are increasingly focusing on cutting down their distribution costs in order to improve their earnings and performance. As a result, these companies are strategically outsourcing logistics services to third-party logistics service providers, who can provide them service at a reasonable price and with highest quality. Many companies prefer to outsource their logistics due to high cost pressures and increasingly complex distribution chains. Logistic companies allow pharmaceutical companies to cut costs as they transfer large volumes of pharmaceuticals for various companies together through synergies and partnerships. The demand for distribution chain services is expected to see particularly strong growth in rapidly growing countries such as India, where they benefit from a strong market position.

The three important reasons for outsourcing pharmaceutical logistics to third-party vendors are predominantly transportation cost cutting motives, timely deliveries into the market, and reducing warehousing costs. Outsourced transportation and outsourced warehousing operations together are likely to represent more potential cost reductions. Various factors are at play in terms of the pressure on pharmaceutical organizations to reduce costs: the rise of generics, the fall of the blockbuster model, and a sharp increase in research and development (R&D) costs by various companies. Outsourcing pharmaceutical logistics can be used to balance some of these challenges. Using a partner who offers capability in logistics procedures can result in sustainable lower cost levels and faster deliveries into the market. In addition, the potential for optimization through distribution chain visibility is enormous and logistics service providers provide this visibility. All these contributing factors together are expected to drive the global pharmaceutical drugs and biologics logistics market in the coming years.

In addition, logistics service providers improve consistency and efficiency of bio-pharma logistics. Constant and reliable service levels are key factors in choosing a logistics service provider. The service provider’s industry experience, safety, and security go hand-in-hand with these measures, particularly in highly-regulated pharmaceutical distribution chains.

Outsourcing is increasingly becoming a part of pharmaceutical companies’ business strategy. It permits pharmaceutical companies to create uniformity and efficiency throughout the distribution chain network. To uphold momentum in outsourced services for pharmaceutical companies, the logistics service provider needs to protect the confidentiality of the proprietary information, prove its trustworthiness in services, provide constant developments, and comply with regulations. These constant and reliable services offered by logistics service providers will enable pharmaceutical and biologics companies to achieve efficiencies in domestic and international markets, thereby improving overall market growth.