Temperaturkontrollierte Verpackungen und die wachsende pharmazeutische Kühlkette

With the release of the first COVID-19 vaccines, the world`s eyes turned to the pharmaceutical temperature-controlled supply chain (“cold chain”). The complexity of transporting and storing ultra-frozen, frozen and refrigerated formulations, including different vaccines with varying temperature profiles, has been highly publicized. Could the world be confident that a COVID-19 vaccine could remain at a dramatically cold temperature from manufacture until it reached its destination? And just how much product could the cold chain handle?

While the pandemic put a spotlight on its complexities, the life sciences cold chain was already benefiting from long-term trends driving growth. The highly critical element of packaging is one of its most important facets, and stands to benefit from this growth.

Here, Brad Morrison, a managing director in the Harris Williams Industrials Group, Paul Hepper, a managing director in the Harris Williams Healthcare & Life Sciences Group, and Stephan Döring, a director in Harris Williams' Frankfurt office, share their views on the cold chain packaging opportunity in pharmaceuticals and possible avenues of investment.

The Cold Chain Packaging Opportunity in Pharmaceuticals

Many life sciences products, including pharmaceuticals, some medical devices, organs, and specimens, require temperature-controlled storage and distribution to ensure molecular stability, preservation, and extension of their useful life. Within pharmaceuticals, the largest categories are vaccines, diabetes treatments (insulin), and biologics – drugs made from living organisms – which include various oncology treatments, rheumatoid arthritis treatments, and others. The market for these categories of pharmaceuticals has been growing steadily in recent years.

Globally, there is significant investment underway in pharmaceutical cold chain distribution infrastructure. Temperature-controlled packaging itself makes up about one-third of the cold chain market at approximately $4.4 billion.¹ 

Source: Pharmaceutical Commerce

 

Like the pharmaceuticals they protect, cold-chain packaging’s demand is strong and is projected to accelerate, buoyed by four long-term pharmaceutical industry growth drivers.  

 

1. Increasingly complex drug product biology

As pharmaceuticals have evolved to contain more high-value active ingredients with stricter temperature requirements, the need for temperature control throughout the supply chain has increased. “Complex biologic and biosimilar drugs, such as new cell and gene therapies, are now a growing portion of the drug research and development pipeline and R&D spending,” says Hepper. “These drugs require frozen storage and transport, adding considerable market upside for cold chain packaging solutions.”

Sources: Pharmaceutical Commerce, Evaluate Pharma, IQVIA, IbisWorld, Grand View Research

 

2. Globalization of clinical trials and post-trial distribution

As the market opportunity to develop drugs becomes increasingly specialized, trials are, by necessity, becoming more global in nature to ensure sufficient participation. This makes the global supply chain for temperature-controlled drugs more critical to trial execution.

 

Morrison notes that global clinical trial drug shipments require packaging to be globally harmonized. This is complex, given the vast differences in climate and infrastructure from country to country. “Pharmaceutical companies want to eliminate packaging risk from the success of the trial,” he says. “Packaging companies that can demonstrate their packaging solutions can excel across climates, and that possess end-to-end distribution, are well-positioned as partners in drug trials as well as for post-trial distribution.”

3. Regulation-based incentives

Regulation-mandated controlled room temperature (CRT) requirements provide cold-chain packaging suppliers with protective barriers to entry. “Engineered packaging solutions used in clinical trials become specified parts of the supply chain when drugs go for regulatory approval,” emphasizes Döring. “Once drugs are approved, it’s unlikely that a pharmaceutical manufacturer would switch out supply chain components, which makes the packaging supplier’s demand incredibly sticky.”

 

Döring says there may soon be additional regulations in specific markets that will drive a greater need for supply chain products and services. For instance, medical devices may need to be reclaimed once they are removed from a patient or no longer needed. 

 

4. Growing interest in sustainability and ESG compliance

While unlikely to ever surpass the importance of performance, pharmaceutical industry interest in packaging sustainability is growing. “Packaging providers in this space must have globally compliant packaging, and their products must reliably perform against stringent requirements. These are table stakes,” says Morrison. “Beyond that, there is interest in the sustainability of inputs, such as biodegradable and non-EPS materials, and interest in sustainable business models and solutions such as greater reuse and return. There is white space in the market for temperature-controlled packaging companies that can demonstrate durability, sustainability, and performance at a reasonable cost.”

Possible Investment Avenues in Pharmaceutical Cold Chain

There are many facets to the cold supply chain and multiple companies with discrete service offerings. That diversity provides a wealth of investment opportunities. Companies are entering the pharmaceutical cold chain packaging space from adjacent industries and as start-ups, and are attacking the market from many different angles. These include single-use packaging; return, refurbishment, and reuse; geographic coverage strategies; and a focus on sustainability or account services.

“There are many different ways to position a company in the pharmaceutical cold chain packaging space. As such, the industry is attracting interest from industrial, healthcare, and service sector investors, and from buyers of all sizes and global reach,” notes Hepper. In particular, the passive side of temperature-controlled packaging (in which the packaging does not have an active energy source) is highly fragmented, creating substantial consolidation opportunity in and of itself. “There’s also the opportunity for providers of active packaging, which is more consolidated, to add on passive product lines,” adds Döring.

Cold Chain Technologies (CCT) is an excellent example of the activity in the sector. CCT is a leading provider of reusable and single-use passive thermal packaging solutions for shipping temperature-sensitive materials, principally serving the life sciences supply chain. Harris Williams advised CCT on its sale to Aurora Capital Partners in July 2019. Through a focus on advanced engineering and technical expertise, CCT continues to develop innovative and differentiated packaging solutions for incredibly demanding applications.

“Another interesting investment thesis is around horizontal integration,” says Hepper. “Pharmaceutical companies are increasingly looking for companies that can function as outsourced service providers, handling as much of their end-to-end cold chain needs as possible, from packaging components to distribution.” Hepper says this search for one-stop shopping has motivated companies to bring on tangential services and capabilities. He says that could include combining analytics and sensor technology with transportation capabilities, or pairing cold chain packaging with shipment tracking and predictive analytics.

Inmark is a leading packaging solutions company that is one of the few providers of both temperature-controlled specimen transport and pharmaceutical solutions. Founded in 1975 as a distributor of rigid container packaging, the company expanded into the design and distribution of life sciences packaging solutions for clinical specimen transport, temperature-controlled, used medical device, and dangerous goods applications. Today, Inmark’s business is more dominant in specimen transport, which requires ambient temperature control. However, its cold chain pharmaceuticals business is thriving: The company is adding services for life sciences companies, such as providing extensive workforce compliance training, the safe transport of used medical devices, regulation-compliant shipping documentation, and pick, pack, and ship services. “It’s a great example of a company that sits at the intersection of healthcare, services, logistics, and industrial sectors,” notes Morrison. Harris Williams advised Inmark on its sale of a majority interest to private equity firm Kelso & Company in December 2020.

“Packaging providers such as Cold Chain Technologies and Inmark hold valuable channel and customer relationships,” says Morrison. “They are well-suited to add capabilities such as analytics and sensor technologies, education, and other services and to be the go-to platforms for pharmaceutical customers.” Sensors that travel with cold shipments can monitor temperature information to detect spoilage, or even alert those along the supply chain when temperature control is at risk. This is highly attractive to pharmaceutical companies, which incur significant losses when a parcel or pallet of pharmaceuticals is ruined because of a break in the cold chain.

Analytics companies are launching technology platforms that combine predictive analytics, machine learning, and other capabilities such as weather modeling to help clients gain more control over their shipping as well as patient outcomes. For those temperature-controlled shipments going direct-to-home, a delayed or lost shipment could adversely impact clinical care.

Harris Williams recently advised Single Use Support GmbH (SUSupport) and SHS Gesellschaft für Beteiligungsmanagement mbH on their investment from Pall Corporation. “This transaction is a good example of horizontal expansion,” observes Döring. SUSupport provides a proprietary, technology-driven, single-use bag solution for bulk liquids in biopharma and regenerative medicine. With this move, Pall can leverage SUSupport’s RoSS platform to enhance its integrated solutions across the bioprocessing value chain.

Making a Cold Chain Packaging Play

There are many tailwinds driving growth in all aspects of the life sciences cold chain, and within pharmaceuticals in particular. The product is expensive, making spoilage a critical risk. Companies need partners they can count on throughout the cold chain, from bulk product shipment to local market and household delivery. Given these factors, temperature-controlled packaging suppliers that have demonstrated their performance and built strong channel relationships face a promising future.

Sources:

1. Pharmaceutical Commerce, UBS, Evaluate

Published March 2021