Pharmaceutical cold chain needs on the rise in China

Recently, Bristol-Myers Squibb announced the opening of a cold chain storage facility located in Wuxi, China. The US$10m investment is to be used to redistribute imported biopharmaceutical products and is expected to assist the company to tap into China’s growing domestic biopharmaceutical products market.

Indeed China’s domestic biopharmaceutical products market is on the rise as the country’s population ages. According to the China Chamber of Commerce for the Import and Export of Medicines and Health Products, sales revenue of China’s biopharmaceutical industry were RMB178bn (USD$28.92bn) in 2012, up 18.4% from 2011. As such, China’s 12th Five-Year Development Plan (2011-2015) identified this sector as one of the seven key developing industries and issued a series of supportive policies to encourage growth. It accounted for 5% of China’s pharmaceutical market in terms of sales in 2012 with more than 400 local biomedicine producers in China.

Logistics providers are also expanding their capabilities to tap into this sector. Earlier this year, FedEx announced it was expanding its facility for health-related products at its Shanghai international hub. The site is to meet China’s specific demands for the storage of medical devices, biological materials and pharmaceuticals, and to meet the distribution needs of pharmaceutical companies

In 2013, niche provider, Marken completed construction of its new pharmaceutical depot in Beijing, China. The facility provides 850 sq m of GMP-compliant space for temperature controlled storage as well as distribution of clinical trial supplies and is located next to the Beijing Capital International Airport.

As the need for biopharmaceuticals increases, the demand for cold chain logistics services will rise as well. Roland Berger Strategy Consultants expects cold chain logistics demand to increase 25% annually through 2017 to RMB470bn (USD$77bn). While agriculture and e-commerce are expected to play major roles in this growth, the pharmaceutical sector will also be instrumental with transport, distribution and storage needs for vaccines and blood products leading the way for this sector.

Bristol-Myers Squibb’s announcement of the opening of its cold chain storage facility is important to the logistics community in that the facility was awarded national-level licenses for complying with China’s new National Good Supply Practice. In order for logistics providers to succeed in this space, they will need to demonstrate knowledge and skill within this sector as well to have an established domestic network.