Pharmaceuticals and the Air logistics

cool chain seminar

Managing emerging markets

by

Radharamanan Panicker

Managing Emerging Markets- India

Some statistics of pharmaceutical and healthcare trade

Geographical spread of India and airport linkages to

production sites

Main Challenges in the supply chain in Indian Markets

Overcoming the challenges of imperfect supply-chain

infrastructure challenges

Improvements that could be made?

Summary

Industry Overview

3.1844.159

5.079 5.191

6.676

8.483

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

646 701925

10981205

1685

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12

Parma exports are expected to continue their momentum of

growth driven by patent cliff, and increasing focus in generics

both in developed and developing world.

Imports are growing, but choice of air cargo service provider is

determined by supplier vendor or regional offices of importing

MNCs

Source: Department of Commerce – Export import Data Bank

Value of Exports Logistics Spend

Sea

Air

Though value of exports by air is less, but the logistics spend

on air cargo is about two third of total logistics spend.

USA, 21

Europe, 22

As ia, 18

Africa, 14

Middle

East, 9

Latam, 8

CIS, 7

USA and Europe form 40-45% of the total pharma export

market.

Pharmaceutical product exports (USD mn) Pharmaceutical product imports (USD mn)

Mode of Cargo- % breakup (2009) Exporting countries - % break up

The Indian Pharmaceutical Market has witnessed healthy growth…..

Industry Overview

5.1

6.9

9.310.6

12.5

14.5

2011 2012 2013 2014 2015 2016

• The Indian exports market

is expected to grow at a

CAGR of 14-16% and

expected to reach USD

14bn by 2016

• Market share to increase

to 3.4% by 2017; it is one

of the largest exporter by

volume:

• By 2009, India had

become the largest

formulation exporter by

volume

Market

Size

Share in

generics

market

55% of the current Indian exports are

to regulated markets, US is the largest

market with 26% of exports

2.1% 2.5% 3.0% 3.2% 3.3% 3.4%

India the Country

• Tropical country

– Temperature in most

part remains around 35

to 45 C for most of the

year

– Delhi and Ahmedabad

experiences lower

temperature to 2C in

winters

• Road infrastructure well

developed connecting

four metros- Delhi (North)

Mumbai (west), Chennai

(South) and Kolkota

(east)

• Rest from good to bad

39/20 C

41/21 C

42/28 C

41/25 C

40/27 C

34/29 C

39/29 C

38/29 C 34/31 C

Pharma production area and gateway airport

• Five distinct regions circled in

the map

• Gateway airports shown

below

Production area Gateway airport

Hyderabad Hyderabad

Mumbai Mumbai

Nashik /Pune Mumbai – 250 km

Hyderabad- 750 km

Goa Mumbai – 500 km

Ahmedabad Mumbai-500 km

Delhi- 800 km

Indore/Bhopal Mumbai- 660km

Delhi- 560km

Chandigarh/Baddi Delhi- 200 km

Mumbai- 1400 km

Challenges in Supply Chain

50% of Top selling drugs by 2016 (USD100bn) expected

to require cold supply chain

15% of pharma product are only shipped through cold chain

(globally 25%)

Traceability

Most of the time, cargo traceability is impossible from the moment

of handover to freight forwarder

Airports, especially are zero-information zones

Integrity/ Quality/Processes

Pilferage

Damage due to handling, reducing product efficacy

Unsatisfactory quality of reefer vehicles, airport terminals etc

Processes are not aligned with requirements of the Pharma cos

esp. w-r-t customs formalities [inspection]

Challenges in Supply Chain

Transportation

High deviation from required temperature inside transport vehicle

Vehicle switched off several times during transport

Rough handling when loaded into vehicle

Handling

Rough handling when coming into contact with any party, which

causes product damage

Storage

Frequent excursions as shipment moves from one area to another

Not always stored as mentioned on the AWB

The Air Logistics Chain

AIRPORT AREA

Shipper

Forwarders

Ground

handlers

Ground

handlers

Trucker Forwarder CHA’s

Cargo handlers

Cargo handlers

Truckers Consignees

Regulatory

Agencies

Regulatory

Agencies

Air Cargo Supply Chain

Cargo Terminal – a Black Box

Shippers

Freight

Forwarders

Warehouse

AIRPORT TERMINAL Customs Documentation & Examination

Cargo Acceptance check (Weight/Volume)

Security Checks (X-ray Screening/

Physical Check)

Palletization

Consignee

Final

Destination

Distribution

Centre

Air

Transportat

ion

Road

Transportation

Road

Transportation

Transportation

to Aircraft

Overcoming Supply Chain constraints

Almost all key airports dealing with Pharma have

temperature controlled Perishable Cargo terminal

1500 to 2500 sq.met facility for multi product handling

Common temperature from acceptance to built up area-

18 to 22C

Varying temperature for ULD storage from (-)10 to 12 C

Custom facility available currently 12 hours – to be

extended to 24 x 7

However no Reefer dolly for inside airport movement of

ULD from terminal to aircraft

CSC Project- CPC Mumbai

Layout of Perishable Cargo Terminal, Mumbai

X-RAY M/c

Temperature control No control

CSC Project- CPC Mumbai

CSC Project- CPC Mumbai

Securing the Pharma supply chain

CSC Project- CPC Mumbai

Securing the Pharma supply chain

CSC Project- Cargo Terminal - Delhi

Perishable Cargo facility- Delhi

Export Cargo custom examination area

Perishable Cargo facility- Delhi

Import Storage Area

Perishable Cargo facility- Delhi

Temperature

Zone ULD/Pallet

Capacity Annual

Capacity EXIM Cargo

12 to 18 deg Celsius 250 Euro pallets*

35,000 MT

PTSP Export – Pharma /

F&V

2 to 4 deg Celsius 9 ULDs PTSP Export – Pharma /

F&V

2 to 12 deg Celsius 9 ULDs PTSP Export – Non-

Pharma

Import Cargo Facility capacity

Export Cargo Facility capacity

Temperature Zone Pallet Capacity Annual Capacity

12 – 18 deg. Celsius 100 Euro pallets

15,000 MT

-20 to -2 deg Celsius 3,000 MT

What more to be done

Clear understanding about the need to move the product in

temperature controlled supply chain

Temperature controlled facility at airport

Origin

Destination

Ability of airlines to ensure required temperature control

Ensure that Shipper use the Time & Temp label with clear

instructions

Check Dry ice quantity is declared on AWB & requirement

to replenish it at transit point or departure airport

Need to input required handling temperature on AWB.

Clear storage instructions are crucial…..

How it is practically on ground

IATA Time & Temperature Sensitive Label

Store between

+15 C to + 20 C

What more to be done

Capability at airports to accept such shipment in

temperature controlled environment

Perishable Cargo terminal at airports

Exclusive Pharma Zone vs Multiproduct facility

Ability to pay for exclusive facility?

Availability of thermal blanket for covering ULDs

Refrigerated ULD dollies – cost and real need

Why not Refrigerated ULD itself

Multiple stacking versus Single stacking

The reality

Maximization of airport space a requirement

What more to be done

Training

Human resource training is the

critical missing link

Training commensurate with

responsibilities of the personnel

Product training

Hazardous goods training

IATA DGR

IATA Perishable cargo regulation

Pharma handling

Summarizing

Maintaining Pharma Cool supply Chain is a collaborative team

effort by Shippers, forwarders, transporters, airlines and cargo

ground handlers

Kerala boat race

Thank you very much for your

attention!