A Blizzard in the Forecast?

The Changing Face of Regulations, Air Cargo Transport, and Logistics Driving Global Healthcare

Distribution

Kevin O’Donnell, Director and Chief Technical Advisor, ThermoSafe Brands and ChairIATA Time & Temperature Task Force

HPCLC Long Boat Key, FL 14 October 2010

Tony Wright, CEO, Exelsius Cold Chain Managementand member IATA Time & Temperature Task Force and PCCIG

Regulatory Drivers

• Increased scrutiny on the entire distribution supply chain

• Increased expectation in shipment monitoring• Greater regulatory enforcement

Major Regulatory Changes, Standards & Guidance to be enacted in 2011

• United States Pharmacopoeia– General Chapter <1079> Good Storage and Shipping

Practices

• World Health Organization– Harmonized guidance for the storage and transport of

time and temperature–sensitive pharmaceutical products

• Health Canada’s – GUIDE-0069 Guidelines for Temperature Control of Drug

Products during Storage and Transportation

But Wait – There’s More!

• Parenteral Drug Association– Technical Report No. 39: Guidance for

Temperature-Controlled Medicinal Products: Maintaining the Quality of Temperature-Sensitive Medicinal Products through the Transportation Environment

– Technical Report No. 46: Last Mile: Guidance for Good Distribution Practices for Pharmaceutical Products to the End User

… and more

– PDA Technical Report No ?: Recommended Best Practices for Manufacturers of Temperature Sensitive Products to Comply with TSA Cargo Screening Requirements

– HDMA Managing Cold Chain & Temperature Sensitive Products

– IATA Chapter 17: Air Transport Logistics for Time and Temperature-Sensitive Healthcare Products

– And more on the way!

Why All the Attention?

• Substantial increase in temperature-controlled drug products due to:

– Patent expiration on biological drugs– Surge in biologics– New product development– New global markets– Evolving manufacturing practices

Global Manufacturing Processes

12-8 C

42-25C

3-30 C

22-8 C

52-25 C

Courtesy:Exelsius/Zymogenetics

Market Statistics

• Market worth approximately US$680bn.• Temperature-controlled market $168bn.• Healthcare market forecast to grow to

US$900bn by 2012.• Nearly 100% of all vaccines and 65% of

biotech products need temperature controlled storage and transportation.

• Biotech market fastest growth – majority by air cargo.

Air Cargo’s Changing Airscape

• Downsized Fleets

• Reconfigured Aircraft Utilization

• Airline Consolidation

• Abandon Lanes

• Trade Imbalances

The 2010 Turnaround

Air Freight Capacity is not Keeping up with Global Growth.

Source: Boeing Report, June 2010

New Aircraft Orders are Up

Source: Boeing Report, June 2010

Aircraft Demand by size 2009-2029

Size New Airplanes Value ($B)

RegionalJets 1,920 60

Single Aisle 21,160 1,680

Twin Aisle 7,100 1,630

Large 720 220

Source: Boeing Report, June 2010

Emerging economies and changing demographics will shift passenger traffic and consequently, cargo flows

And at a time when outsourced production means greater logistical challenges to cold chain distribution……

The Overall Air Cargo Sector • Approximately 12% of total airline revenues are from air cargo.

• By volume of cargo carried, only 5% is ‘perishable’.

• Healthcare products represent less than 0.5% of total air cargo.

Total Airline Revenues

US$50bn

Source: :IATA

‘Cold Chain’ Products Growing Faster

Cold ChainProducts +27%

$773bn

$187bn

$147bn

$877bn Total Market +13%

Global Biopharma Sales 2008-2011

Source: Pharmaceutical Commerce

How is the global air cargo sector reacting?

• Increased focus on the healthcare sector.

• Increased collaboration.

• New air cargo handling regulations.

• Improved technology.

Increased Sector Focus

# Global Airlines offering Pharmaceutical ‘cold-chain’ products

Collaboration

• Mutual

• Physical

• Beneficial

Collaboration: Getting the entire cold chain working together to improve the way it operates

Collaboration in the air cargo logistics process – who’s involved?

Distributors &Consignees

OriginForwarder

s & Trucking

Co’s.

Origin-Destination Air Carrier

DestinationForwarders &Trucking Co’s

Manufacturers& Shippers

AirportGround

Handlers

Thermal SolutionProviders

AirportGround

Handlers

Distributors &Consignees

OriginForwarder

s & Trucking

Co’s.

Origin-Destination Air Carrier

DestinationForwarders &Trucking Co’s

Manufacturers& Shippers

AirportGround

Handlers

Thermal SolutionProviders

AirportGround

Handlers

23% 57% 20%

Courtesy Exelsius

Key Areas of Cold Chain Risk

Collaboration in Practice

• IATA Time & Temperature Task Force

• Manufacturers, forwarders, airlines, regulators, ground handling co’s, technology providers, etc

• Brought together into a commonly understood purpose – patient safety.

• Required immense time & effort

Collaboration resulted in a new set of Regulations...

• IATA Perishable Cargo Regulations, Chapter 17

• Binding to all IATA members

• Specific to the handling of time and temperature-sensitive products.

... and a vital new label

Gaining Industry Support

Courtesy CSafe & ThermoSafe

Transportation Technology Advances

• Provides both heating and cooling.

• Reliable, compressor-driven technology.

• On-board temperature monitor

Summary

• Regulation, regulation, regulation• Challenges of global manufacturing• Air Cargo’s changing ‘airscape’• Capacity vs. growth• Cold chain growing fast(er)• The air cargo sector is reacting• Collaboration & new technology

Who depends on us working together?

They Do!

Thank You!

Tony Wright

tony.wright@exelsius.co.uk

Kevin O’Donnell

kevin.o’donnell@tegrant.com