Adam Tetz- Director of Worldwide Marketing, Peli BioThermal
Each year for the past two years, the underlying theme of nearly every year-in-review or predictions for the following year was normalcy. The world craved fewer day-to-day disruptions, and in some respects, the return of familiar events, uninhibited outings and social gatherings created a sense of ease. Yet challenges stemming initially from COVID-19 and now new, unrelated challenges continue to cause a stir for businesses and consumers alike.
This year’s pharmaceutical cold chain predictions bridge the old and the new. A picture of the post-COVID world is becoming clearer, but uncertainty remains about how war in the Ukraine, a looming recession, high fuel prices and carbon dioxide shortages may impact the future of supply chains. Let’s take a look at how 2023 might unfold.
The War in Ukraine
Tensions between Russia and Ukraine grew in early 2022 as Russia launched a full invasion of Ukraine in late February. In an effort to stifle the Russian economy and ultimately end the war, the world began to impose sanctions on Russian imports and exports.
According to a recent New York Times report, many countries have found living without Russian raw materials incredibly difficult. And Russia’s long-standing ties with Europe are slowly being unknotted as the region works to find new sources of energy. Europe stopped importing Russian coal in August, banned oil shipped by sea from Russia in December and will ban all petroleum products in February 2023.
For the pharma industry, we may see an increase in the cost of plastics used in syringes, bottles and more, as well as packaging materials. This is in part due to the coal and crude oil imported from Russia, but also due to increasing oil and gas prices in countries that do not rely on Russian oil. We’ll also continue to see pharmaceutical companies forgo shipping products to Russia, increasing the need for humanitarian aid to supply important pharmaceuticals.
Additionally, clinical trials saw an impact from the war in Ukraine. Russia is one of the most ethnically diverse countries in the world, and genetic diversity is important to clinical trials to test side effects in different populations. When the war began, Russia was largely lost as a clinical trial location. We expect to see clinical trials organizations focus on how to achieve the need for genetic diversity in other ways, including deepening relationships with countries that offer comparable genetic diversity.
Inflation and Potential Recession
In the summer of 2022, debates began about whether the U.S. economy was in a recession. By a standard definition of two consecutive quarters of negative gross domestic product, the U.S. already entered a recession. But many economists look at the economy more holistically and have yet to agree that the U.S. meets recession criteria. Regardless, the current state of the economy is impacting general consumers and businesses.
Though the unemployment rate in October 2022 was 3.7% lower than average for the U.S.–inflation is a growing concern for families. As of October 2022, the consumer price index had increased 7.7% over the past 12 months. Key contributors include the shelter index, medical care and personal care, among others.1
As expenses rise for consumers and businesses, we see the trickle effect of job loss and subsequent loss of health insurance. In 2023, we expect to see fewer people seeking preventative care and more people delaying non-urgent surgeries. Similar to what happened during the height of the COVID-19 pandemic, this creates adverse health impacts in the long-term.
Though unemployment is low and some pharmaceutical companies are still doing well from COVID-19 vaccines and therapies, we do see pharmaceutical companies participating in layoffs. This will slow down discovery and production of new pharmaceutical products.
We anticipate larger pharmaceutical companies will cut back on their own discovery and look to purchase smaller companies with products on the verge of approval. Additionally, we expect an increased focus on products with a wider human health impact versus one-to-one or one-to-few therapies.
Carbon Dioxide Shortage
Intertwined with the war in Ukraine and inflation across the globe is an ongoing carbon dioxide (CO2 ) shortage. Though the U.K. is hardest hit since it relies heavily on energy imports, the U.S. as the world’s largest producer of natural gas was not immune.
CO2 is created by burning natural gas to separate carbon and hydrogen atoms. Hydrogen is then used to create ammonia and carbon to create CO2. Ammonia is used to make fertilizer, so the demand for fertilizer drives the supply of CO2.
The global rise in natural gas prices in 2021 caused natural gas prices to rise from $1.7 per million British thermal units (MBtu) in March to $6.3 million per MBtu in October. The cost crisis continued when demand outpaced supply during the summer of 2022. As a result, fertilizer plants cut back production, decreasing the supply of CO2.2
Dry ice–or frozen CO2 is used in temperature-controlled packaging to keep pharmaceutical products and other temperature-sensitive consumables safe during transit. No other comparable cooling source exists for transit at its super-frozen temperature of approximately -75 degrees Celsius. Current phase change material does not hold temperatures that cold predictably enough. Liquid nitrogen, on the other hand, is expensive, more dangerous to handle and too cold to replace dry ice. Yet the volatile nature of CO2 prices requires innovation in cooling sources for temperature-controlled packaging. We expect this year will bring more conversation about alternative cooling sources, and maybe some early innovation in thermal packaging.
Direct-to-Patient and Direct-from-Patient Services in Clinical Trials
As uncertainty grew around COVID-19 and its long-term impact, healthcare organizations made moves to decrease in-person clinic visits. Telehealth became more widely available and accepted to treat common illnesses, elective surgeries were delayed and clinical trials organizations considered in-home care.
Through 2020 and beyond, decentralized clinical trials were a hot topic of conversation. Making clinical trials more patient-centric was among one of the many challenges facing the pharmaceutical industry. Direct-to-patient (DtP) care would allow clinical trials organizations to deliver study medications directly to patient homes or a nearby medical facility. By contrast, direct-from-patient (DfP) would allow in-home sample collection by a healthcare professional.
Most thought DtP and DfP services would become the norm for the pharmaceutical industry, similar to the ubiquity of business meetings conducted over Zoom or Teams. But costs, process documentation and logistics remain significant hurdles. Because these models are complex, they require investigators to establish procedures and agreements with all parties to ensure medication distribution is handled properly and that medication is delivered in temperature range and good quality condition. Not to mention the fact that many clinical trials participants–often elderly–miss the in-person connection of a hospital or clinic visit.
While we will still see decentralized clinical trials, we anticipate a move toward a hub-and-spoke clinical trial model. We’ll see more primary clinical trial’s locations with satellite locations globally. These satellite locations will support in-person visits. However, we will also continue to see in-home care or sample collection in more remote locations.
Sustainability
Each year we touch on sustainability in our predictions. It’s a topic that continues to gain momentum, and this past year was no different. In 2022, more than 100 health systems signed on to the Biden administration’s greenhouse gas and climate resilience pledge. This voluntary commitment includes a promise to reduce greenhouse gas emissions 50% by 2030 with net zero emissions by 2050. The commitment also includes an inventory of supply chain emissions by the end of 2024.
Many of the same organizations, including AstraZeneca, GSK, Merck KGaA, Novo Nordisk, Roche and Sanofi, also teamed up as part of the Sustainable Markets Initiative health systems task force to decarbonize the industry’s supply chain, including patient care systems and clinical trials. The group recently stressed the importance of focusing on emissions from suppliers, distributors and manufacturers, which can make up a significant part of an organization’s carbon footprint.3
Pharmaceutical companies will continue to dig deeper into the carbon footprint of their suppliers in 2023, and we may see some standardization of how information is reported as ratings organizations such as EcoVadis gain acceptance. Additionally, we’ll see suppliers like Peli BioThermal continue to drive for more sustainable packaging and manufacturing practices.
Each year brings surprises that no one anticipates. This past year was no exception with a new war and inflation, both of which deepened the continuing COVID-19-related supply chain challenges for the pharmaceutical industry. Yet reflecting on the previous year and anticipating the state of the industry for the following year helps organizations better prepare and positions them to react more thoughtfully to the unknown. Overall, we expect the pharmaceutical and cold chain industries to continue to thrive in 2023.
References
- Bureau of Labor Statistics, November 2022, https://www.bls.gov/news.release/pdf/cpi.pdf
- BCC Research, Why is there a CO2 shortage and how is this affecting the European and US market?, October 2022, https://blog.bccresearch.com/why-is-there-co2-shortage
- Fierce Pharma, Fellowship of the green: AstraZeneca, Samsung, GSK and more unite to slash greenhouse gas emissions, November 2022, https://www.fiercepharma.com/pharma/ fellowship-green-astrazeneca-samsung-gsk-and-4-other-eco-minded-pharma-majors-unite-slash
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