In the course of our work, GLDPartners has amassed a compilation of industry intelligence on major sectors in the global economy. Over the next several months, we will be posting industry intelligence updates that seaports, airports, inland logistics centers and economic developers should find valuable as they work to understand how their customer base is changing. The first one up is the pharmaceutical industry.

The pharmaceutical industry has been in the national headlines repeatedly as politicians, the medical community, and consumers alike are questioning the high cost of drugs. The most recent example is the EpiPen but for several years the prices for cancer drugs have been part of the debate over health care costs. This has created an urgent need for the industry to focus on costs which is relatively new and unfamiliar territory for large pharmaceutical businesses.
The size of the pharma market has more than doubled over the past 10 years but while all this growth has been occurring the industry has endured massive disruptive influences brought on by expiring patents, which has led to growing competition from cheaper generic medicines from Asia; shareholder pressure; mergers and acquisitions; and new customer buying behaviors. All these changes are driving consolidation and restructuring in the industry on an unprecedented scale.

In working with our clients, GLDPartners has identified 5 trends which are influencing decisions being made by both pharma companies and their logistics providers.
• With so many drugs losing patent protection, generic drugs are rushing into the market. The US is the largest generic market in the world and the majority of these
drugs are made outside of the US: 43% in China, 39% in India while only 13% are made in the US.
• Supply chain agility and efficiency are at the top of pharma’s agenda as new global markets emerge and create a large pool of new customers.
• The pharmaceutical sector is increasingly being influenced by the Internet. Online drug-stores are attracting attention as they continue to shape the future of drug purchasing and have created new relationships between patients/customers, retail/wholesale pharmacies and drug companies.
• Wholesaling is the dominant way branded drugs are currently distributed in the US. But with on-line sales and e-commerce, the industry is moving to direct sales channels and direct distribution routes to reduce margins and the focus will be selling directly to pharmacies, hospitals, etc. rather than third party distributors.
• Pharma manufacturers are embarking on cost-saving programs and a key focus will be on outsourcing to logistics service providers.

As the pharma industry moves forward, companies will continue to be focused on controlling costs; embracing new manufacturing technologies; evolving their supply chains; and revaluating their distribution channels, warehouse needs, and logistics costs.