Biopharmaceutical companies seeking to meet the public-health needs of emerging markets must ensure their products are distributed to intended patient populations effectively and reliably. Whether companies typically focus on low-margin, high-volume or high-margin, low-volume products in these markets, it is critically important to reach patients in geographies that present difficult logistics challenges.
Challenges in the biopharmaceutical distribution chain for developing and emerging markets
Pharmaceutical distribution in emerging and developing markets is no easy task. Biopharmaceutical distribution chains in emerging markets are notoriously complex, often involving private-sector partners (e.g., importers, distributors, and pharmacies) as well as public-sector organizations (e.g., procurement agents, public hospitals, and health centers). Figure 1 provides a simplified illustration of the links connecting manufacturers to patients.
Distribution in emerging markets presents three particular challenges:
• Improving forecast accuracy and data reliability for estimating vaccine or drug demand
• Maintaining product stability throughout the distribution chain, including requirements for cold-chain continuity
• Managing the dispensing of medical products to patients in the “last mile” of the distribution chain (i.e., the stage where products are delivered from the wholesaler or pharmacy to the consumer).
These issues, however, are not insurmountable. Inspired by unmet medical need, several organizations have developed innovative strategies that can greatly facilitate emerging-market distribution.
Improving demand planning and forecast accuracy. Many vaccines and therapeutics required for promoting health in developing countries often have limited markets in the developed world. Even with recent increases in donor support for research and development as well as for procurement, both suppliers and customers are unable to accurately predict demand (1, 2).
This inability introduces risk across the biopharmaceutical value chain. Biopharmaceutical manufacturers have tended to under-forecast demand to hedge against excess inventory of both finished product and raw material. At the same time, customer populations have tended to over-forecast because ofthe high social consequences of product shortages (2). The result is inaccuracy in characterizing market demand, and for an industry that traditionally uses a make-to-forecast operating model, this problem contributes to lost sales or product waste.
Improving market reliability. Innovative approaches developed over the past few years have helped reduce risks, lower costs, avoid supply shortages, and encourage future investments. In 2009, the Bill & Melinda Gates Foundation, along with the governments of Canada, Italy, Norway, Russia, and the United Kingdom, pledged $1.5 billion, and the Global Alliance for Vaccines and Immunization (GAVI) promised to allocate $1.3 billion to ensure a minimal market price for pneumococcal vaccines for low-income countries through an advanced market commitment (AMC) agreement (3). Several other procurement models also are being implemented, including minimum purchase commitments, flexible-quantity contracts, buy-back contracts, revenue sharing, and real-option contracts. Mechanisms such as these help to drive interest and participation from industry by providing clarity to procurement timelines, quantities, and pricing of products (2).
Information technology tools. To better plan and control manufacturing operations, biopharmaceutical companies regularly employ information-technology tools that enable simultaneous material and capacity planning. For example, AstraZeneca has been able to make quantitative improvements in on-time delivery and inventory turnover by using a dynamic, demand-based operating model to integrate information flows between buyers and suppliers (4). Following industry practices, the nonprofit global health organization PATH developed a software tool called Cold Chain Equipment Manager, which features data management, analysis, and reporting functions, in addition to logistical capabilities (5).
Synchronizing customer requirements with production for public health products, such as artemisinin-based combination therapies (ACTs) that have long production lead times and short shelf lives, can improve use of limited resources and reduce waste. Such synchronization, however, is often difficult to manage. Novartis scaled up production of its malaria combination therapy Coartem (artemether and lumefantrin) to meet the demand forecasted by the World Health Organization (WHO). However, changing grants policies ultimately resulted in inadequate donor funding, which in turn led to large surpluses and huge losses for the manufacturer (2).
Information networks. Organizations also are establishing new types of networks that allow global health stakeholders to share up-to-date, credible, and comprehensive information. A good example is the “infomediary” championed by the Center for Global Development (2). High-quality data shared by competent individuals provide the necessary input to systematically build individual demand forecasts from common baseline forecasts. The third-party infomediary facilitates sharing of blinded data sets, which maintain the integrity of any competitive advantages while generating baseline demand forecasts. By aggregating forecast data, buyers and suppliers are more likely to align their individual strategies and more effectively leverage resources in the near and long term.
Mutually reinforcing, these various improvements in forecasting and planning help strengthen the front end of the distribution chain. Structured information sharing between clusters of stakeholders will lead to more accurate demand predictions of what products will be procured, in what quantities, and during what timeframe. Better upfront market forecasts will allow suppliers and buyers to pick the best contracting and financing mechanisms for procurements. The combination of a better business case and public- health results will attract interest, involvement, and investments, which, in turn, will result in increased purchasing power, expanded product availability, and improved health security.
Cold-chain distribution networks have never been more critical to fulfilling global market needs for vaccines and biologics.The infrastructure needed to support temperature-controlled distribution, however, is lacking in many emerging market regions. Because of gaps in regional cold-chain infrastructure, countries in regions, such as Sub-Saharan Africa, often struggle to complete distribution of medical products to combat infectious diseases. Economic growth in countries, such as India, has driven increased demand for vaccines and biologics when existing cold-chain capacity is already needed by other industries that transport temperature-sensitive products, including food and other consumable goods. Innovations for overcoming cold-chain constraints fall into two major categories: near- and mid-term improvements to maximize use of existing cold-chain infrastructure and longer-term technology development to alleviate future dependency on temperature control.
Maximizing existing infrastructure. Simply reducing the amount of time a product spends in the distribution chain can help maintain stability, but improved refrigeration techniques for storage and transport are still necessary to meet cold-chain requirements. Technology developments include low-cost solar refrigerators that operate without batteries, as well as “smart” refrigerators with remote temperature monitoring and systems that protect vaccines from freezing (6).
In an effort to ensure reliable vaccine delivery, PATH has worked with other international collaborators to produce prototype vaccine vial monitors (VVMs) to monitor vaccines exposed to high temperatures. The VVM consists of a small sticker that is affixed to the vaccine vial. As temperatures rise, the VVM changes color. As a result, healthcare workers can quickly determine whether the vaccine has been exposed to heat. As a result, WHO has amended its policies regarding the duration of use for open vials, thereby leading to a significant decrease in vaccine waste and vaccine-related costs. UNICEF now requires vaccines to incorporate VVMs. Today, the monitors are widely used in developing countries (6).
Other innovations have focused on low-cost solutions to maximize the throughput of existing distribution chains. For instance, airports throughout India have expanded cold-storage capacity to facilitate transfer of medicines to remote villages. Out-of-cold-chain (OCC) studies funded by WHO and PATH in Vietnam have identified licensed medical products, such as HPV vaccine and other high-heat stability biologics, which may not require a cold chain, thus freeing up resources for other cold-chain transport needs. In Senegal and Tunisia, efforts are underway to integrate supply chains of biopharmaceuticals and other temperature-controlled products during transport (7).
Alleviating dependency on temperature control. The global health community also is exploring new approaches to reducing or eliminating reliance on cold-chain transport through the development of novel formulations and stabilization technologies for vaccines and therapeutics. In addition to lyophilization, a form of freeze-drying for biopharmaceuticals, companies and organizations are experimenting with spray-drying of vaccines to produce formulations with high stability and heat tolerance. For example, the nonprofit research organization Medicines in Need in South Africa is developing a spray-dried formulation of a tuberculosis vaccine for pulmonary administration (8). Organizations also are providing prefilled reconstitution devices to avoid common pitfalls in reconstituting vaccines with heat-stable formulations, such as inaccurate mixing or a lack of access to clean water (9).
Shortening the last mile of distribution
In a biopharmaceutical supply chain, the “last mile” may actually be thousands of miles or just a few feet to the point of delivery (10). While considered the most important link in the chain, it is also often the most expensive—and the least efficient. Contributing factors include improper handling, delivery delays, theft, and other forms of lost or wasted products (11).
Supply-chain innovations. Several operational innovations, now in pilot stage, will help to shorten the last mile. WHO, PATH, and the Bill & Melinda Gates Foundation launched Project Optimize to create a supply chain for the distribution of drugs and vaccines (12). The mission of Project Optimize is to use an integrated supply-chain system that incorporates a modern management-information system for delivering drugs, vaccines, and other products. In one of the pilots launched in Senegal, Project Optimize set up a “moving warehouse” that reduced costs of delivery by distributing medicines and vaccines from a central location to district pharmacies and health posts. A logistics management-information system also was implemented to manage the moving warehouse (13).
Alternative delivery systems. In addition, innovations in dosage-form technologies are enabling safer and more efficient administration of vaccines and therapeutics. Overcoming the need for needles and syringes may allow faster administration and higher patient compliance in completing vaccination courses while requiring fewer healthcare workers. Furthermore, new technologies, such as needle-free dosage forms that eliminate transmission of blood-borne pathogens, may help address recent calls to avoid unsafe injections (14). Table I provides several examples of these innovations (15–18).
Table I: Examples of innovations in dosage forms for alternative delivery mechanisms (15–18).
Intercell’s vaccine patch technology received interest from organizations such as the Bill & Melinda Gates Foundation.
Researchers at Tufts University are developing nasal-drop dosage forms for delivering rotavirus vaccine.
Ingestible thin film
BioProgress and other companies offer thin-film dosage forms for oral delivery of pharmaceuticals and vaccines.
Researchers at the Netherlands Vaccine Institute are exploring the use of bioneedles, biodegradable implants for vaccination without syringes or needles, for slow release into the skin or deep tissue.
Strengthening local health systems.One of the most critical contributors to resilience in the last mile is the strength of local health systems. Healthcare workers require adequate training to ensure they can consistently handle and administer products. They should also, in turn, provide written handling and storage instructions to patients and caregivers on how to store products, including how to perform temperature monitoring on their refrigerated products (10).
For example, PATH and WHO have developed training materials to guide healthcare workers on the proper use and disposal of vaccines in developing countries. In 2006, an earthquake in Yogyakarta, Indonesia, resulted in the loss of electricity for multiple days. Properly trained local healthcare workers were able to save approximately 50,000 vaccine doses because they knew how to interpret the colors of the VVMs on the vials (19).
Significant operational constraints will continue to pose a challenge for the distribution and administration of vaccines and therapeutics in developing countries. The increasing pace of innovation, however, can help overcome these barriers in the distribution chain. New ideas already are being implemented for improving forecast accuracy, product stability in storage and transit, and local administration of medical products to patients.
The opportunities are vast for biopharmaceutical companies and their global health partners that are able to apply these innovations to developed markets. Any country faced with naturally occurring infectious diseases, intentional acts of bioterrorism, or other threats to health security, or the health-related effects of natural disasters or industrial accidents may face similar distribution-chain issues. These innovations may provide the solutions countries need.Chan Harjivan ([email protected]) is a partner and James Guyton ([email protected]) is a principal, both in the global public health practice at the global management consulting firm PRTM.
This article is Part III of a three-part series on biopharmaceutical issues in public health, government, and developing-world markets. Part I, which focused on drug development, appeared in the March 2011 issue of Sourcing and Management. Part II, which focused on manufacturing and access, appeared in the April 2011 issue of Sourcing and Management.
1. Global R&D funding for malaria has increased 119% since 2003: PRTM analysis based on the Global Malaria Action Plan, accessed Apr. 25, 2011.
2. S. Neelam et al., “A Risky Business: Saving Money and Improving Global Health Through Better Demand Forecasts,” Center for Global Development Global Health Forecast Working Group (Washington, DC, 2007).
3. GAVI, “GAVI Partners Fulfill Promise to Fight Pneumococcal Disease” press release (Geneva, June 12, 2009).
4. SAP, “MySAP Supply Chain Management at AstraZeneca” case study (Walldorf, Germany, 2005).
5. S. Kibet et al., “Using Software to Achieve Continuous Quality Improvement in Supply Chain,” Optimize (PATH, Seattle, WA), Dec. 2010.
6. PATH, “Vaccine Technologies at PATH” (Seattle, WA), www.path.org/projects/vaccine-technologies-overview.php, accessed Apr. 25, 2011.
7. PATH, “Rethinking the Vaccine Supply Chain” (Seattle, WA), www.path.org/projects/project-optimize.php, accessed Apr. 25, 2011.
8. Medicines in Need, “BCG (Vaccine) Inhalation Powder (BCGIP)” (Cambridge, MA), www.medicineinneed.org/our-approach-ourpipeline-bcg-inhalation-powder.html, accessed Apr. 25, 2011.
9. PATH and WHO, “Trends in Vaccine Availability and Novel Vaccine Delivery Technologies: 2008–2025” (PATH, Seattle WA and WHO, Geneva, July 2008).
10. PDA, Technical Report No. 46: Last Mile-Guidance for Good Distribution Practices for Pharmaceutical Products to the End-User (Bethesda, MD, 2009).
11. R. Gevaers, E. Van De Voorde, and T. Vanelslander, "Characteristics and Typology of Last-mile Logistics from an Innovation Perspective in an Urban Context" presented at the Transportation Research Board Annual Meeting, Washington, DC, Jan. 25, 2011.
12. WHO, “Immunization Service Delivery and Accelerated Disease Control” (Geneva),www.who.int/immunization_delivery/systems_policy/optimize/en/index.html, accessed Apr. 25, 2011.
13. WHO, “Senegal: Demonstrating the Benefits of an Integrated Supply Chain” (Geneva), www.who.int/immunization_delivery/systems_policy/optimize_senegal/en/index.html, accessed Apr. 25, 2011.
14. L. Simonsen et al., Bull. WHO 77 (10), 789–800 (1999).
15. Intercell, “Bill Gates Visited Intercell to Discuss Vaccine Approaches for Developing Countries” press release (Vienna, July 20, 2010).
16. Tufts University School of Medicine, “New Low-Cost Method to Deliver Vaccine Shows Promise” press release (Boston, Nov. 16, 2010).
17. BioProgress, “SoluLeaves” company information (Cambridgeshire, UK), www.bioprogress.com/pages/content/index.asp?PageID=50, accessed Apr. 25, 2011.
18. H.H.J.B. Hirschberg et al., Vaccine 26 (19), 2389–2397 (2008).
19. PATH, “Vaccine Vial Monitors” (Seattle, WA), www.path.org/projects/vaccine_vial_monitor.php, accessed Apr. 25, 2011.