ASK THE EXPERT: Mohammed Esa, senior VP, Agility
Demand for pharmaceutical logistics in the Middle East
Demand for specialist pharmaceutical logistics in the Middle East has grown recently , but has historically been constrained by a lack of infrastructure. Increasingly attracted by the potential of the region, international pharmaceutical companies have looked to logistics service providers to help facilitate growth and develop their reach into the Middle East.
A regional shift in storage and transportation
In recent years, the industry has seen a paradigm shift in the way goods are stored and transported. In the past, companies would ship from multiple points to multiple markets in order to meet growing demands. Today, the distribution model has moved towards a ‘hub and spoke’ model, with goods stored in a central location, offering economies of scale and faster response time.
This model also enables pharmaceutical companies to better serve their customers, react to commercial opportunities and have greater control over product integrity before reaching their distributors. These changes to existing supply chain models have been brought about as a result of ever increasing expenditure at government level, growing populations, increased local manufacturing and the introduction of mandatory private health insurance.
With 50% of the region’s population being under the age of 30, health issues confronting the region’s booming population are an important issue and resulting in a greater reliance on pharmaceuticals.
Moving towards an outsourced supply chain
In recent years there has been a definite increase in pharmaceutical companies outsourcing logistics operations. Within a complex market such as the Middle East, organisations depend on the expertise of established service providers and are often reluctant to take the risks involved in investing in logistics, preferring instead to focus on their core business.
Selecting a pharmaceutical logistics partner
The provision of a variety of temperature controlled and chilled storage environments is a central component to a cold chain solution, but this also requires supporting expertise and infrastructure to bring it to reality. Having the necessary knowledge of customs and regulatory requirements, providing visibility throughout the supply chain and having the requisite transport solutions in place to protect temperature sensitive products are all essential criteria for the selection of an appropriate logistics service provider. These criteria must also go hand-in-hand with the ability to meet industry standards, such as Good Distribution Practices (GDP).
The pharmaceutical industry’s growth potential and its evolving logistics practices have increased the scope and opportunity for specialised logistics solutions in the sector. However, this is still a fairly niche sector in the Middle East, requiring significant investment, capabilities and expertise.
The biggest challenges in pharmaceutical logistics
Product integrity and dealing with the complexities of the region are at the core of pharmaceutical logistics solutions. Logistics providers must also have the ability to help organisations facilitate growth and develop into new markets and above all ensure that, ultimately, their obligations to stakeholders and customers are met.
Predictions for the Future
Ongoing growth and expansion into further markets will continue to characterise the pharmaceutical logistics market in the region. Along with greater demand from the region, we will also see the Middle East expand its role as a supplier through increased manufacturing, which we are already seeing in Jordan and Egypt. One of the key drivers for further growth would be a consistent regulatory framework and ideally, homogenised legislation across the GCC. As the market matures, we can expect practices and strategies to develop in line with the proven best practices from leading developed markets. We may soon see such developments as direct deliveries to hospitals, pharmacies and patients. This will lead to greater demands for professionalism and better resources to manage the supply chain process; and as the pharmaceutical market grows in the region, the Middle East logistics industry is set to have an increasingly important role in helping to support this growth.